Audit: Audit Committee:
Coursework scenario:
In a recent round table discussion amongst business graduates about corporate governance and auditing, one of the participants commented as follows:
“In recent years, the importance of good corporate governance in listed companies in the UK and the USA has been the subject of much commentary, regulation and legislation. As part of this commentary, it is generally thought that an Audit Committee can help a company maintain objectivity with regard to financial reporting and the audit of financial statements. However, given the absence of a statutory requirement for an Audit Committee for listed companies in the UK, I question whether there is any real value in the Audit Committee function both to the company’s internal and external auditors and other relevant stakeholders.”
What to do:-
Critically discuss the above comments concerning the role of the Audit Committee having reference to responsibilities, membership, and relationships with other parties both internal and external to the organisation. Ensure that you illustrate your discussion with reference to actual companies and cases.
Below must be included within the essay
Explain why the audit committee came about eg large amount of businesses that committed fraud examples of which companies.
Explain what an audit committee does and the difference between Uk and USA
Explain the roll of the audit committee role is within the uk advantages of having an audit committee
Disadvantages of the audit committee
Limitations of the audit committee
Give counter argument for each point made
Eg cost v benefits
Talk about Enron what went wrong, what the audit committee did and should have done
Talk about Tesco, what has gone wrong and what the audit committee could and should have done. Compare with at least one more supermarket eg Sainsbury.
Look what the audit committee says about the company in the company accounts.
Conclusion