Corporate Governance
INTERNAL AUDIT ROLE IN CORPORATE GO
The Turnbull Report identifies the following criteria as the basis of an effective Internal Audit
• Assurance that the management processes are adequate to identify and monitor significant risks
• Confirmation of the effective operation of the established internal control systems
• Credible processes for feedback on risks management and assurance, and
• Objective confirmation that the Board receives the right quality of assurance and information from management and this information is reliable.
Questions boards must ask if they do not have an Internal Audit function
• Does the company have clear objectives and have they been communicated so as to provide effective direction to employees on risk assessment and control issues?
• Are the significant internal and external operational, financial, compliance and other risks identified and assessed on an ongoing basis?
• Is there a clear understanding by management and others within the company of what risks are acceptable to the Board?
In order for a company to achieve its goals, good corporate governance recommends that it should establish an Audit Committee to assist the Board of directors with the discharge of its responsibilities of:
• Safeguarding the company's assets;
• Maintaining adequate accounting records; and
• Developing and maintaining effective systems of internal control.
In this regard, it is expected that the Audit Committee would:
• Review the half year and annual financial statements before submission to the Board focusing particularly on:-
1. Changes in accounting policies
2. Significant adjustments arising from the audit
3. Major judgmental areas
4. Compliance with accounting standards, disclosure and legal requirements, and
5. Subject the financial statements to independent critical appraisal.
• Consider appointment,...
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