Question

Write a report on a governance issue topic for a local company . The issue can be an accounting, reporting and governance related topic that affects the board, audit committee, senior management and the auditors. This report must be written in the form of a report to the board and senior management.

Answer 1

Corporate governance is very important in our business world today, especially after the frequent non-stop worldwide financial crises. Strong corporate governance is now considered a basic condition to accept and register an organization in most of the Stock Exchange Markets all over the world. The audit committee plays a major role in corporate governance regarding the organization's direction, control, and accountability. As a representative of the board of directors and main part of the corporate governance mechanism, the audit committee is involved in the organization's both internal and external audits, internal control, accounting and financial reporting, regulatory compliance, and risk management.

The audit committee is responsible for monitoring the organization’s ccounting policies, principles, and practice. It reviews the organization’s financial statements monthly, quarterly, and/or annually according to the organization’s size, system, and nature of business. The role of audit committee in exercising an active monitoring of the organization’s financial reporting process is well established and confirmed by many corporate governance codes and professional announcements recently

The audit committee members often discuss with management the accounting standards and principles, as well as accounting estimates and judgments made by management. The audit committee interacts regularly with the organization’s chief financial officer, controller, and finance manager, and report on the capabilities and competence of these managers. Using outside consulting resources as deemed necessary, the audit committee may direct a special investigation when significant problems with accounting practices or personnel is identified or alleged. Among other things, the external auditors are required to report to the committee on their views on management's selection of accounting principles, accounting adjustments made by management or external auditors, any disagreement or difficulties encountered in working with management, and any identified fraud, irregularities, or illegal acts.