AUDIT COMMITTEES کمیته های حسابرسی. مطلب تویی طالب تویی، هم...
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Transcript of AUDIT COMMITTEES کمیته های حسابرسی. مطلب تویی طالب تویی، هم...
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
SECTION 1SECTION 1 INTRODUCTIONINTRODUCTION
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.
SECTION 1SECTION 1 INTRODUCTIONINTRODUCTION
Sarbanes-Oxley Act:Sarbanes-Oxley Act:Named after sponsors Senator Paul Sarbanes and
Representative Michael G. Oxley
SECTION 1SECTION 1 INTRODUCTIONINTRODUCTION
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.
3.2 3.2 WhatWhat Are The Are The ResponsibilitiesResponsibilities of An Audit Committee?of An Audit Committee?
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.
3.2 3.2 WhatWhat Are The Are The ResponsibilitiesResponsibilities of An Audit Committee?of An Audit Committee?
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