Audit Committee

Topics: Corporate governance, Audit, Internal control Pages: 4 (1403 words) Published: May 1, 2013
In the past decade, in Australia have had a negative impact on investor confidence in capital markets. In response, corporate regulators have searched for mechanisms to achieve a return to reliable, high quality financial reporting, resulting in an increasing emphasis on corporate governance. In addition, regulators and investors have increasingly recognised the role of audit committees and an important corporate governance mechanism in restoring confidence in the capital market. The ASX Corporate Governance Council (AXS CGC) defines corporate governance as “the framework of rules, relationships, systems and processes within and by which authority is exercised and controlled in corporations. It encompasses the mechanisms by which companies and those in control are held to account” (2007, p. 3). There fore, corporate governance influences how the objectives of the company are set and achieved, how risk is monitored and assessed, how performance is optimised. In fact, effective corporate governance structures encourage companies to create value through entrepreneurism, innovation, development and exploration and provide accountability and control systems commensurate with the risks involved (AXS CGC 2007, p. 3).

In Australian in 2013, the Australian Stock Exchange Corporate Governance Council issued the Principles of Good Corporate Governance and Best Practice Recommendations . In the same year ASX listing rule 12. 7 was issued, the top 500 firms at the beginning of the financial year must establish an audit committee and must also comply with ASX CGC. A number of Audit Committees characteristics have also been identified as important in prior literature in an attempt to measure AC effectiveness. These include AC member independence separated into non-executive and independent, audit committee numbers, the financial expertise and knowledge of AC members and the frequency of AC meetings. In conjunction with independent, competent Boards of Directors, Audit...
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