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Mana-Co.-BSA-2A.docx - DON HONORIO VENTURA STATE UNIVERSITY...

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Securities and Exchange CommissionCode of Corporate GovernanceGroup Name:Mana Co.Bamba, Renz Engelbert C.Bernal, Evangeline Elizabeth S.Castro, Lyn Charllote B.Catacutan, Jhoesel Brylle N.Culala, Arielle H.Figueroa, Bayon Jhonster P.Lising, Jordan P.Perez, Marion Caitlin S.Cabambangan, Villa de Bacolor 2001, Pampanga,PhilippinesDON HONORIO VENTURA STATE UNIVERSITYCOLLEGE OF BUSINESS STUDIES
DISCUSSION QUESTIONS:1.Assume that management has determined that its organization’s audit committee is noteffective. How do the weaknesses in the audit committee affect management’sevaluation of internal control over financial reporting? Would an ineffective auditcommittee constitute a material weakness in internal control over financial reporting?State the rationale for your response.Submission of financial statements of corporations is required by Security and ExchangeCommission (SEC). This helps the different entities to assess their current financial position andprofitability of a company. The management particularly the audit committee is responsible forthe compliance of standards in preparing financial statements. In addition to that, internalfinancial reporting controls that are effective should include fair certainty about the accuracy offinancial reporting and the preparation of financial statements and also other engagementsperformed by the auditor.The ineffective oversight and preparation of financial statements will significantly affect theorganization’s management. If the knowledge of the audit committee is insufficient andinadequate the reliability of the content of the statement can probably be affected. This can beconsidered a weakness in the management and operations of the corporation. The non-compliancewith the standard imposed by different regulators can create a damage and penalty on part of thecorporation.Internal control over financial reporting can suffer from an inefficient and ineffective auditcommittee when the failure of the audit committee to do its job leads to problems in othercommittees as well. An internal auditor job is to look over the financial reports and statements ofa company. They are the one that has an oversight in the compliance to ethical and other concerns.Their work is also important to manage the risks in decision making through providing a well-made and accurate evaluation of the organization. With that instance, the information that isprovided by the audit committee was also necessary for other committees like the risk committee,public relations committee, finance committee, and so on. Therefore, the internal control of thecompany will be insufficient to make things work. This means that a part in the audit committee is
weak and lacking in capacity and should be taken an action by the board of directors who are incharge in delegating these roles to them.

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