Answer_to_questions_in_tutorials_12

Answer_to_questions_in_tutorials_12 - Answer to questions...

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Answer to questions in tutorials 12 1. a. An audit committee is a special committee formed by the board of directors and made up of board members. It is ideally a group of outside directors who have no active day-to- day operations role and who are a liaison between the independent auditor and the board of directors. The audit committee assists and advises the full board of directors, and, as such, aids the board in fulfilling its responsibility for public financial reporting. b. The functions of an audit committee may include the following: 1. Select the independent auditor; discuss audit fee with the auditor; review auditor's engagement letter. 2. Review the independent auditor's overall audit plan (scope, purpose, and general audit procedures). 3. Review the annual financial statements before submission to the full board of directors for approval. 4. Review the results of the audit including experiences, restrictions, cooperation received, findings, and recommendations. Consider matters that the auditor believes should be brought to the attention of the directors or shareholders. 5. Review the independent auditor's evaluation of the company's internal controls. 6. Review the company's accounting, financial, and operating controls. 7. Review the reports of internal audit staff. 8. Review interim financial reports to shareholders before they are approved by the board of directors. 9. Review company policies concerning political contributions, conflicts of interest, and compliance with federal, state, and local laws and regulations, and investigate compliance with those policies. 10. Review financial statements that are part of prospectuses or offering circulars; review reports before they are submitted to regulatory agencies. 11. Review independent auditor's observations of financial and accounting personnel. 12. Participate in the selection and establishment of accounting policies; review the accounting for specific items or transactions as well as alternative treatments and their effects. 13. Review the impact of new or proposed pronouncements by the accounting profession or regulatory bodies. 14. Review the company's insurance program. 15.
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This note was uploaded on 07/31/2011 for the course MGMT 2027 taught by Professor Shak during the Three '07 term at Queensland.

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Answer_to_questions_in_tutorials_12 - Answer to questions...

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