Audit Committee can help a company maintain OBJECTIVITY with regard to financial reporting and the audit of Financial Statements.
Audit committee is the sub committee of the board of directors usually containing a number of non-executive directors. Non-Executive directors are those directors who are not involved in the operations of the Company.
What Does Audit Committee Do?
1. Read and Interpret the financial statements of the company on behalf of Board of Directors, they raise questions which are answered by the management of the company. On the basis of the report the Audit Committee prepares a report raising any ISSUES or making RECOMMENDATIONS to the board in AGM.
2. Audit Committee is responsible for making Strict Internal Controls:
Internal Control is a system by which
the opportunity for fraud is reduced.
management cannot misuse the powers.
prepares cost saving techniques.
3. Audit Committee provides a platform for Finance Manager/Director to express the issues of concern, and which he can use to get things done which might otherwise be difficult.
4. Audit Committee make recommendations to Board of Directors for appointment of next year's Auditors.
Purpose of these Committees?
1.The purpose of these committees is to strength the position of the company .
2.The committee reviews the financial statements on quarterly basis or when ever feasible, and analysis the position of the company, expenditures incurred during that quarter and financial progress and monitor losses etc.
3. Quick control over the financial actions of the company.
Members of Audit Committee!
It is generally observed that the Board Members donot have the sufficient experience/qualification to interpret the financial statements, so it is recommended to appoint only those Directors who have knowledge of Finance/Accounts.
Suggestions/Recommendations/Feedback is highly appreciable.
Drafted by: M. Fahad Mehmood, Assistant Manager Finance, Fisheries Development Board
ACCA welcomes consultation on international auditing standards
ACCA has welcomed the European Commission's (EC) recently announced consultation on the adoption of International Standards on Auditing (ISAs).
The consultation follows ACCA's longstanding support for ISA adoption, and it will submit its full response by the consultation deadline of 15 September 2009.
'Modernising auditing standards will be beneficial to the auditing profession because it will mean a consistency of approach across the EU,' said David York, ACCA head of auditing practice. 'We welcome the rigour of the EC's consultation. It presents the EC's case for believing that the standards do meet the criteria to be recognised in EU law - that they have been developed with proper due process, public oversight and transparency, and are generally accepted internationally; that they contribute a high level of credibility and quality to the annual or consolidated accountants; and most importantly overall, that they are conducive to the European public good.'
The consultation is seeking the views of preparers, users, and public authorities as well as auditors. There are important questions concerning adoption, including whether, as ACCA believes, ISAs should be adopted for all statutory audits, including those of small companies.
'This is a strong step forward,' said York. 'Modernised ISAs bring real benefits for business, investors and regulators. We encourage all interested parties to engage with this consultation and we await the results eagerly.'
The consultation follows ACCA's longstanding support for ISA adoption, and it will submit its full response by the consultation deadline of 15 September 2009.
'Modernising auditing standards will be beneficial to the auditing profession because it will mean a consistency of approach across the EU,' said David York, ACCA head of auditing practice. 'We welcome the rigour of the EC's consultation. It presents the EC's case for believing that the standards do meet the criteria to be recognised in EU law - that they have been developed with proper due process, public oversight and transparency, and are generally accepted internationally; that they contribute a high level of credibility and quality to the annual or consolidated accountants; and most importantly overall, that they are conducive to the European public good.'
The consultation is seeking the views of preparers, users, and public authorities as well as auditors. There are important questions concerning adoption, including whether, as ACCA believes, ISAs should be adopted for all statutory audits, including those of small companies.
'This is a strong step forward,' said York. 'Modernised ISAs bring real benefits for business, investors and regulators. We encourage all interested parties to engage with this consultation and we await the results eagerly.'
