Ch 1. Regulation in global economy

Question 1

Audit Committees (3 objectives)

Answer 1

• Increase public confidence and credibility/objectivity of financial info.
• Assist Directors in meeting responsibilities
• Strengthen external auditor independence.

Question 2

Audit committee (5 main functions)

Answer 2

• Review internal controls
• Review internal audit
• Review external audit (efficiency, effectively, independently)
• Recommend auditor remuneration/nomination
• Requirements under combined code.

Question 3

Audit committee (3 ads)

Answer 3

• Improve quality of Management accounting.
• Improved communication between directors and external auditors
• Avoids conflict between auditors and mgmt.

Question 4

Audit committee (4 dis ads)

Answer 4

• Seen to ‘catch out’ mgmt
• Overburdening NEDs
• May lead to two tier board
• Costly