Professional Documents
Culture Documents
FACULTY083-MS438-KUST20201-L7-P7-Committee of The Board-L1
FACULTY083-MS438-KUST20201-L7-P7-Committee of The Board-L1
FACULTY083-MS438-KUST20201-L7-P7-Committee of The Board-L1
Social Responsibility”
MS-438
Lecture 07
“ Committee of a Board”
Topic to be Discuss
Committee of the Board
Issues and Problems
Common Committees
The Audit Committee
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Committee of the Board
Board Level Committee
Board is non-executive body
Meet at most 4 time in Year
Board have limited time for coverage of all issues presented
So, necessary for board to get assistance from some expert
Forming committee is one way to get assistance
Some committees are required by Law and some are for better governance
Advantages of committee are:
1. Impartial and professional input 2. Reduce workload 3. Detailed and
specialized information
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Committee of the Board
Issues and Problems
Board level committee need be handle efficiently by board
Committee delay decision
Board member hide behind the Committee recommendations
Lack of competency and skill in Board level committees
Committee fails to perform its function- also other to perform it
In developing countries, committee is ONE-MAN SHOW
Committee are manipulated by Management or Controlling shareholders
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Committee of the Board
Common Committees
Audit Committee
Nomination Committee
Executive Committee
Remuneration Committee
Compliance Committee
Companies combine functions of two committees into one
Functions of compliance committee and Audit committee
Functions of Remuneration and nomination commitee
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Committee of the Board
Audit Committee
Membership of Audit Committee
All members are Independent non- executive directors (INED)
No executive directors are made member to endure its independence
The Chairman of INED must be INED
Sarbanes-Oxley act 2002 requires one member must be financial expert
Audit Committee can hire outside expert for its assistance
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Committee of the Board
Audit Committee
Responsibilities of Audit Committee
Oversight of Financial reporting and accounting system
Liaison with external auditor of the company
Ensuring compliance in respect of disclosure and other requirement of
law relating to financial statements
Monitoring the internal control process of the company
Oversight of the risk management process of the company
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Committee of the Board
Audit Committee
Term of Reference of Audit Committee:
• Determination of appropriate measures to safeguard the listed company’s assets;
• Review of quarterly, half-yearly and annual financial statements of the listed company, prior
to their approval by the Board of Directors
• Review of preliminary announcements of results prior to publication;
• Facilitating the external audit and discussion with external auditors of major observations
arising from interim and final audits and any matter that the auditors may wish to highlight
(in the absence of management, where necessary);
• Review of management letter issued by external auditors and management’s response thereto
• Ensuring coordination between the internal and external auditors of the listed company;
• Review of the scope and extent of internal audit and ensuring that the internal audit function
has adequate resources and is appropriately placed within the listed company;
• consideration of major findings of internal investigations of activities characterized by fraud,
corruption and abuse of power and management's response thereto;
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Topic: Committee of the Board
Audit Committee
Term of Reference of Audit Committee:
• Ascertaining that the internal control systems including financial and operational
controls, accounting systems for timely and appropriate recording of purchases and
sales, receipts and payments, assets and liabilities;
• Review of the listed company’s statement on internal control systems prior to
endorsement by the Board of Directors and internal audit reports;
• Instituting special projects, value for money studies or other investigations on any
matter specified by the Board of Directors, in consultation with the CEO and to
consider remittance of any matter to the external auditors or to any other external
body
• Determination of compliance with relevant statutory requirements
• Monitoring compliance with the best practices of corporate governance and
identification of significant violations
• Consideration of any other issue or matter as may be assigned by the Board of
Directors
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk
Course: Corporate Governance and Social Responsibility, MS-438-- Instructor: Majeed Ullah Khan, Asst. Prof. Institute of Business Studies, KUST -- Email:
majeedullah@kust.edu.pk