The association between audit committee - Myassignmenthelp.Com

Question: Discuss about the The association between audit committee. Answer: Wooolsworth Group, in its financial report of 2017, has evidently published a corporate governance statement. The corporate governance statement as disclosed by the management of the Woolsworth Group for the financial year of 2017 claims to describe the key corporate governance policies and practices of the company that have been followed throughout the year. The particular process that has been followed by the company for the purpose of preparing the financial statements is that the management of the Woolworths group has compulsorily followed the guidelines or recommendations that have been laid down by the ASX Corporate Governance Council under the Corporate Governance Principles and Recommendations (ASX Principles). The particular domain or section of the financial report under which the information about the corporate governance statement of the company is found is the Directors Report (Section 3) of the annual report and under the Other Information (Section 5) of the annual report of Woolsworth Group. The company has four board committees in regards to the assistance that is required by the Board of Directors of the company in exercising its responsibilities and providing the necessary recommendations and advice. These four committees are that have been established by the Woolsworth Group are as follows: Nomination Committee Audit, Risk Management and Compliance Committee (ARMCC) People Performance Committee Sustainability Committee The different Board committees have essentially established a charter that defines the different duties and responsibilities of the respective committees. The Audit, Risk Management and Compliance Committee (ARMCC) consist of five members as mentioned in the annual report of the company. The composition of the audit committee is according to the ASX recommended guidelines that have been established in order to maintain a stable corporate structure of the business. This can be evidently derived from the fact that the composition of the board committee has minimum three directors. The majority of the directors are independent. The chair is independent and not board chair. The members of the committee are mandated to have business experience and have knowledge about the financial aspect of business. One of the members or staff of the committee should mandatorily have financial qualifications and experience. Thus, the disclosure in the annual report of the company about the composition of the ARMCC signifies that the audit committee has the correct composition and is in accordance to the ASX guidelines (Contessotto and Moroney 2014). The statement that the different audit committees are of significant benefit to the auditing profession, the company, the auditor and/or society as a whole is correct and applies to Woolsworth Group significantly. This is because of the following benefits provided by the audit committee: The audit committee makes the entire process of scrutinizing and evaluating the financial statements of the company easier, which in turn helps the external auditor in carrying out the auditing proceedings. The audit committee also implements proper internal controls in the organization that helps in mitigating chances of fraud and misstatements in the books of accounts. This in turn will not only help the external auditor but also ensure that the accounting statements present a fair image of the company, which is essential for the third party investors (Safari and Safari 2017). The audit committee also focuses on the financial management and the reporting of the company, which is highly beneficial for the company as a whole (Martinov-Bennie, Soh and Tweedie 2015). References Contessotto, C. and Moroney, R., 2014. The association between audit committee effectiveness and audit risk. Accounting Finance, 54(2), pp.393-418. Martinov-Bennie, N., Soh, D.S. and Tweedie, D., 2015. An investigation into the roles, characteristics, expectations and evaluation practices of audit committees. Managerial Auditing Journal, 30(8/9), pp.727-755. Safari, M. and Safari, M., 2017. Board and audit committee effectiveness in the post-ASX Corporate Governance Principles and Recommendations era. Managerial Finance, 43(10), pp.1137-1151.