What Should be the Mission of an Effective Audit Committee?
Quite simply, the audit committee’s mission is oversight. More specifically, this oversight should be focused on the following areas: financial reporting, risk management, audit function.
What are the Basic Responsibilities of an Audit Committee?
The audit committee should be directly responsible for the appointment, compensation, retention and oversight of the work of auditors who provide audit services to the organization whether the services are provided by the principal auditor or another firm.
What Suggested Specific Activities or Duties Should an Audit Committee Undertake to Maximize its Effectiveness and Contribution to the Organization in Light of its Responsibilities?
An awareness of the independence rules is essential to maintaining audit committee independence.
What Services are Auditors Not Allowed to Provide to Nonprofit Organizations?
Generally audit services provided must be performed by CPAs who are deemed independent. Generally, CPAs are not independent if they are in a position to influence, make management decisions, provide accounting services or have financial interests in a nonprofit organization.
What are the Required and Other Desirable Communications That Audit Committees Should Have with the Auditors?
Accounting rules are not always precise. Quite often there is great latitude in the judgments that produce financial statements. We believe in open, regular discussions with the audit committee, presenting opportunities for direct questions about how different issues are handled by the organization.
What Should Audit Committees Be Focused on in Consideration of Reliable and Transparent Financial Reporting?
The audit committee must have an unwavering mandate for financial statements that transparently and meaningfully portray the organization’s circumstances.
What Specific Steps Might the Audit Committee Undertake in Assessing the Tone at the Top and Ensuring Ethical Behavior within an Organization?
We will continue to stress the importance of understanding an organization’s tone at the top because it provides the basis for ethical behavior within an organization.
What Can Audit Committees do to Better Understand the Organization’s Risks, Including Fraud Risks, and the Adequacy of Controls in Place to Mitigate those Risks?
The global financial crisis and economic turbulence continues to expose organizations that have poor risk assessment and management practices and should serve as a warning to all organizations.
What is the Expected Responsibility of the Audit Committee as Compared to the Board with Respect to Risk Oversight?
Currently, there is debate over the division of responsibilities between the board of directors and other committees of the board e.g., audit, compensation, finance and nominating committees , specifically with respect to risk oversight.
What is the Audit Committee’s Role in Prevention, Deterrence and Detection of Fraud?
No discussion of risk would be complete without a direct consideration of the risk of fraud and the responsibilities for dealing with fraud.
Focus on Fraud: COSO Fraudulent Financial Reporting Study
In February 2010, COSO issued em Fraudulent Financial Reporting: 1998-2007, a report which provided a comprehensive analysis of fraudulent financial reporting investigated by the SEC between January 1998 and December 2007.
What Can the Audit Committee do to Strengthen the Audit Function?
As indicated previously, the audit committee’s oversight responsibility for the audit function covers work performed by both external and internal auditors.
What Role Does the Audit Committee Play in the Organization’s Internal Control Environment?
Internal control over financial reporting is crucial to the governance of an organization. The audit committee’s primary responsibility with respect to internal control is the internal control over financial reporting.
What is the Audit Committee then expected to do with Such Information on Reported SDs and MWs?
If SDs or MWs are identified, the audit committee should ask these questions.
What is the Audit Committee’s Role with Respect to Implementation of IFRS?
The International Accounting Standards Board IASB has developed International Financial Reporting Standards IFRS to address the variability in reporting standards between countries.
What is the Audit Committee’s Role with Respect to Consideration of Income Tax?
The Internal Revenue Service IRS Federal Form 990 Form 990 asks in Part VI, Section B whether the organization provided a complete copy of the Form 990 to all members of its governing board before filing the form.
What are the Best Practices for Establishing Procedures for Handling Complaints?
The audit committee must establish procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters, including procedures for the confidential anonymous submission by employees of concerns regarding questionable accounting or auditing matters.
Under What Circumstances is it Advisable for the Audit Committee to Engage Independent Counsel and Consultants?
Audit committees should have the authority to engage independent counsel and other consultants as they deem necessary to carry out their duties.