The Audit Committee

The board of a company has many responsibilities.  To enable the company to perform these responsibilities effectively, the board set-up some committees to handle some specific group of related responsibilities.

1.   Audit Committee

The audit committee is the sub-committee of the board of directors which has oversight responsibility over the financial reporting integrity, audit functions and internal control systems of the company.

Audit Committee meeting

 

        2.   Composition of the Audit Committee

The audit committee is made up of non-executive directors. Non-executive directors are directors who do not have executive functions in the company or simply refers to directors who are not involved in the day-to-day administration of the company.  The members of the audit committee should at least be three (3) for big companies and two (2) for small companies with at least one (1) financial management expert member.

3.   The Functions of the Audit Committee

1.    To recommend to shareholders the appointment of external auditors and to manage the contract between the auditor and the company;

2.    To monitor and review the internal audit function of the company;

3.    To monitor and ensure the integrity of the financial reporting system of the company;

4.    To assess the efficiency and effectiveness of internal control and risk management systems of the company and make appropriate recommendations for improvement;

5.    To assess and ensure the independence and objectivity of the external auditor and ensure the quality of the external audit service and;

6.    To manage the relationship between the external auditor and the management of the company.