Audit Committees and Their Effectiveness

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After this, continue again by other organizations report on the audit committee responsibilities. The report of the audit committee responsibilities basically in 1979, the American institute of certified public accountants based on the report of extensions, such as Rhett Wei committee report for 1985, 1987, the United States against false financial reporting council public report, public supervision committee report for 1993, the blue ribbon committee report for 1999, 2002 Sarbanes Oakes, act, and so on.

To ensure that the enterprise faces the risk of being appropriately, identification and management should be focused on by the board of directors. Risk management requirements to establish and maintain effective internal control system. Internal control system includes all management authorities choose to implement the policies and procedures, to ensure that its business activities orderly and efficient. This includes abide by the management policy, protect the security of the assets, prevent and find fraud and errors, accounting records the correct, complete and timely preparation of reliable financial information.

The audit committee should be convinced himself that management system to identify the main risks facing the enterprises and maintain a proper control environment. In particular, the audit committee shall be the supervision and administration of personnel related to ensure the company carries out the appropriate internal control and makes these for the effectiveness of internal control strategy.

The audit committee to consider the internal control matters shall include:(1). the effectiveness of the management control and financial control; (2). the reliability and timeliness of the external and internal report, and comply with applicable laws, regulations and internal policies.(3).in order to focus on internal control, audit committee members should be expected to arrange for the company internal control system of the fixed point investigation and review documents to familiar with these terms and conditions. The audit committee should review all routine reporting by internal auditors and the external auditors to submit proposals to find the internal control weakness of management. The audit committee should also be aware of management personnel and take action to those weaknesses. The risk of the audit committee should consider whether there is any special need special attention or needs the guidance of the auditors.

The audit committee should consider every external auditor, supervise the quality of their services, and consider the rationality of the use. When evaluating their performance, the audit committee should be discussed with the external auditors audit results and obtain feedback from the management. The audit committee can also consider the nature of the external auditors to provide other services, and its impact on auditor independence, including management consulting services.

External auditors are expected to be independent and be able to use their best professional judgment to guide the work. There, external auditors and managers will be between the appropriateness of such as accounting or differences of opinion arose on things, such as the adequacy of the disclosure. These differences may be typically results and related accounting estimates and judgment. Although such differences usually in management and solve in the discussion of external auditors, audit committee can still provide a useful in the process of the solution, and, in any case, should understand and administrator members discuss and solve the key problems.

Because the audit committee of internal audit, it should receive and check all the members of a copy of the report issued by the internal auditors and managers of its response. All significant differences of opinion should be monitored by the audit committee.(1) The audit committee can review; (2) The target of the internal audit function and operation; (3) Performance of the internal audit function and the adequacy of its available resources; (4) Internal auditors report significant matters; (5) Collaboration between internal audit and external audit personnel and cooperate;(6) The internal audit department head to report directly to the audit committee chairman in order to enhance the independence of the internal audit function may be more appropriate;

As a committee of the board of directors, board of directors may sometimes invite the audit committee to consider financial reporting, internal control and audit outside of normal business scope.

Due to the audit committee meetings may be relatively small, so they should be a good organization and correctly record. The secretary shall be responsible for arranging meetings, take meeting minutes and circulated files.

Meeting minutes should be circulated among the members of the board of directors in the company to make the board understand the committee's activities and advice at any time. Each year the audit committee should prepare a formal report to the board of directors at least, a detailed report of the audit committee in this year's work and found the problem. This report should include: (1) The efficiency and effectiveness of the internal control system of the summary; (2) About the effectiveness of the internal audit function and feedback summary of the internal audit result; (3) Associated with external auditors to discuss their work in the interim and annual audit and results as well as the management proposal;(4) The term suggestion, external auditors, and about the resignation, replacement or dismissal auditors all problem.

A key element in the corporate governance process of any organization is its audit committee. The battle for financial statement integrity and reliability depends on balancing the pressures of multiple stakeholders, including management, regulators, investors and the public interest. We present the guidance and tools to make audit committee best practices actionable.