FORMING AN AUDIT COMMITTEE

c8: corporate governance

ADVANTAGES DISADVANTAGES
process & structure used to direct & manage the buss & affairs
provides a framework of control mechanisms that supports in achieving its goals
preventing any unwanted conflicts improves the people perceive their
quality of aim to find faults or
AIM OR management mistakes committed
ELEMENTS PURPOSE
accounting by management
IMPORTANCE good board practices
accountability leads to better
seeing that it is run properly everyone has their own duty & needs to be fully non-executive
accountable for responsibility communications
involves balancing the directors feel
interests of many stakeholders disclosure & transparency OBJECTIVES between directors,
overburdened
disclosure- revealing information external auditors &
of a company transparency- ensures that high standards of accurancy with details
formulating business strategies are met management
for the company legal compliance
leans more towards involves regulatory framework BOD able to More
ensure consistence approaches to accounting are adopted monitor & follow responsibility as
safeguarding the sustainability CONCERNS an advisory body
nationally
of the company minimize risk of misstatements
company activities to be alert to any
& performance potential risks
shareholder rights
STRUCTURE OF AN AUDIT concept of fairness
protect the rights of their shareholders
COMMITTEE develop effective communicating information creates
control environment allowances for creates
not involved in the daily management COSTS additional costs
alligns internal control procedures to monitor finances & general & board
of the company performs risk management assessment
not full time employees of the meetings
company for the past 3 financial years
not have a business relationship MAIN ADVANTAGES
not related to anybody who falls OF HAVING AC
within this criteria ROLES OF AN AUDIT COMMITTEE
must be independent reducing fraud risks through corporate fully informed about significant matters related to the company's audit
must be a director of the company governance oversight/supervision and it's financial statement
invite knowledgeable persons to communicates its insights, views and concerns about relevant
attend its meetings overseeing & improving financial
practices & reporting via giving transactions and events to the internal and external auditors
concerns an effect on the financial or audit of the company are
MALAYSIAN CODE actionable insights communicated to the external auditor
ON CG 2012 enhancing the internal audit function There is coordination between internal and external auditors
PRINCIPLE 1: establish clear
roles & responsibilities
NECESSITY

MAIN PILLAR
PRINCIPLE 2: strengten
composition To enhance an entity business INDEPENDENCE
PRINCIPLE 3: reinforce ACCOUNTABILITY
prosperity, and accountability
independence Ensure that
PRINCIPLE 4: foster and long term shareholder value
TRANSPARENCY independent
commitment To ensure the managing will use FAIRNESS director and
Ensuring that
PRINCIPLE 5: uphold their time, talent, and available the advisors are free
integrity in financial resources properly in the best
reporting management is Protecting Ensuring from the influence
PRINCIPLE 6: recognize & interest of owners accountable to the right of timely and of others
manage risks To provide faithful reports on the board of shareholder Ensure procedures
accurate and structures are
PRINCIPLE 7: ensure timely & the economic condition and director Providing
high-quality disclosure Ensuring that disclosure minimize or
performance of the entity to effective on all
PRINCIPLE 8: strengthen the BOD is redress for completely avoid
allow greater flexfibility in the materials conflicts of
relationship between accountable violations
company and shareholders application of the best practices shareholder matters interest