Audit Committee Research Assignment Jessica Hunt
1. Principle 1: The Audit Committee’s Key Role in Monitoring the Other Component Parts of the Audit Process.
The audit committee oversees the work of management, including the internal auditor, and the outside auditors in the financial reporting process to endorse the processes and safeguards employed by each. The audit committee should encourage procedures that promote accountability among management, ensuring that management properly develops and adheres to a sound system of internal control, that the internal auditor objectively assesses management’s accounting practices and internal control, and that the outside auditors, through their own review, asses management and the internal auditor’s practices. The audit committee should seek to affirm the existence of these nexuses of accountability by learning the roles and responsibilities of each of these participants. From this the audit committee will be in a position to devise appropriate questions as to how each participant carries out its functions.
Principle 2: Independent Communication and Information Flow between the Audit Committee and the Internal Auditor.
The audit committee must establish and support a culture that promotes open disclosure on the part of the internal auditor and a recognition that if the internal auditor identifies a problem and cannot obtain the support of management, that he or she has a duty to the audit committee, the full board, and shareholders to disclose the relevant information to the audit committee. Whether it be through regular meeting without the presence of management or regular confidential memos to the audit committee.
Principle 3: Independent Communication and Information Flow between the Audit Committee and the Outside Auditors
As with the internal auditor, the audit committee should develop regularly scheduled meetings and/or reports with the outside auditors independent of management. In addition, the...