AUDIT COMMITTEES کمیته های حسابرسی. مطلب تویی طالب تویی، هم منتها، هم مبتدا خورشید را حاجب تویی، امید را واجب

AUDIT COMMITTEESAUDIT COMMITTEES

کمیته های حسابرسیکمیته های حسابرسی

مطلب تویی طالب تویی، هم منتها، هم مبتدا

خورشید را حاجب تویی، امید را واجب تویی

CONTENTCONTENT

SECTION 1 SECTION 1 INTRODUCTIONINTRODUCTION SECTION 2 SECTION 2 WHYWHY?? SECTION 3 SECTION 3 WHATWHAT?? SECTION 4 SECTION 4 CONCLUSIONCONCLUSION

SECTION 1SECTION 1 INTRODUCTIONINTRODUCTION

In case you forgot:In case you forgot:

• XeroxXerox• EnronEnron• HealthSouth HealthSouth • Tyco InternationalTyco International• WorldComWorldCom• AIGAIG• AdelphiaAdelphia


These scandals, which cost investors billions of dollars when the share prices of the affected companies collapsed, shook public confidence in the nation's securities markets.


Sarbanes-Oxley Act:Sarbanes-Oxley Act:Named after sponsors Senator Paul Sarbanes and

Representative Michael G. Oxley


Sarbanes-Oxley Act:Sarbanes-Oxley Act: SOX, is a United States federal law

enacted on July 30, 2002 in response to a number of major corporate and accounting scandals including those affecting Enron, Tyco International, Adelphia, and WorldCom.

SECTION 2SECTION 2 WHYWHY DO WE NEED AUDIT DO WE NEED AUDIT

COMMITTEES?COMMITTEES?2.12.1 Governance requirements Governance requirements Any organization is defined by its Any organization is defined by its

purpose. For a municipality it is most purpose. For a municipality it is most likely to be the provision of the likely to be the provision of the highest level of services to the highest level of services to the community it serves in a sustainable community it serves in a sustainable way and at the most economical way and at the most economical rate.rate.

2.1 2.1 Governance Requirements Governance Requirements (Cont)(Cont)

Governance is therefore essentially a Governance is therefore essentially a function of function of

Leadership and DirectionLeadership and Direction Appropriate Risk Management and Appropriate Risk Management and

ControlControl Valuable Disclosure Valuable Disclosure

The IIA Corporate Governance The IIA Corporate Governance ModelModel

EffectiveGovernanc

e

SECTION 3SECTION 3 WHATWHAT IS AN AUDIT IS AN AUDIT

COMMITTEE?COMMITTEE? DefinitionDefinition

In a publicly-held company, an In a publicly-held company, an Audit Committee is an operating is an operating committee of the Board of committee of the Board of Directors, typically charged with Directors, typically charged with oversight of financial reporting and oversight of financial reporting and disclosure.disclosure.

SECTION 3SECTION 3 WHATWHAT IS AN AUDIT IS AN AUDIT

COMMITTEE?COMMITTEE? How Are the Members Selected?How Are the Members Selected?

Committee members are drawn Committee members are drawn from members of the Company's from members of the Company's board of directors, with a board of directors, with a Chairperson selected from the Chairperson selected from the members.members.

3.1 3.1 WhatWhat Are The Are The ObjectivesObjectives of An of An Audit Committee?Audit Committee?

To assist the board in fulfilling its To assist the board in fulfilling its oversight responsibilitiesoversight responsibilities

To maintain effective working To maintain effective working relationships with board, management, relationships with board, management, auditorsauditors

3.2 3.2 WhatWhat Are The Are The ResponsibilitiesResponsibilities of An Audit Committee?of An Audit Committee?

Overseeing the financial reporting Overseeing the financial reporting and disclosure process. and disclosure process.

Monitoring choice of accounting Monitoring choice of accounting policies and principles. policies and principles.

Overseeing hiring, performance and Overseeing hiring, performance and independence of the external independence of the external auditors. auditors.


Oversight of regulatory compliance, Oversight of regulatory compliance, ethics, and whistleblower hotlines. ethics, and whistleblower hotlines.

Monitoring the internal control Monitoring the internal control process. process.


Overseeing the performance of the Overseeing the performance of the internal audit function. internal audit function.

Discussing risk management policies Discussing risk management policies and practices with management.and practices with management.

Key performance areas Key performance areas

Corporate governanceCorporate governance::• ComplianceCompliance• EthicsEthics• Effective and efficient control Effective and efficient control

systems to prevent fraud, etc.systems to prevent fraud, etc.

Governance by an audit committeeGovernance by an audit committee

implies oversight not managementimplies oversight not management

Organizational arrangements Organizational arrangements

Appointment of membersAppointment of members:: Majority of members not in the employ of Majority of members not in the employ of

the companythe company No councilorsNo councilors Chairperson – not employeeChairperson – not employee Size of the committeeSize of the committee Large enough to represent a balance of Large enough to represent a balance of

views but small enough to operate views but small enough to operate efficientlyefficiently

Size of the organization to determine – 3 Size of the organization to determine – 3 to 6to 6

Organizational arrangementsOrganizational arrangements

Membership requirementsMembership requirements:: Critical success factor for Critical success factor for

performanceperformance Accounting or related financial Accounting or related financial

management expertisemanagement expertise Legal backgroundLegal background Ability to read and understand basic Ability to read and understand basic

financial statementsfinancial statements

SECTION 4SECTION 4CONCLUSIONCONCLUSION

‘‘In the context of corporateIn the context of corporate

governance, a proper balance needs togovernance, a proper balance needs to

be achieved between the freedom tobe achieved between the freedom to

manage, accountability and themanage, accountability and the

interest of different stakeholders’interest of different stakeholders’

The King ReportThe King Report

CONCLUSION (Cont)CONCLUSION (Cont)

‘ ‘ The mere existence of an audit The mere existence of an audit committee is not enough. The audit committee is not enough. The audit committee must be vigilant, committee must be vigilant, informed, diligent and probing in informed, diligent and probing in fulfilling its oversight responsibilities’fulfilling its oversight responsibilities’

Report of the National Commission on Report of the National Commission on Fraudulent Financial Reporting Fraudulent Financial Reporting (Treadway Commission)(Treadway Commission)

THANK YOUTHANK YOU

Documents

AUDIT COMMITTEES کمیته های حسابرسی. مطلب تویی طالب تویی، هم منتها، هم مبتدا خورشید را حاجب تویی، امید را واجب