Audit Committee (AC) is one of the committees of the organization’s board of directors which is oversight and facility decision-making address matters to the financial reporting process, audit process, the internal control system of the organization, compliance with law and regulation.
The audit committee is one of the organization’s board directors which is responsible for:
- The audit committee is responsible for evaluating, selecting, and hiring the top management in audit division and setting up the auditor function in the organization.
- The audit committee is responsible for reviewing the result of internal and external auditor’s work.
- The audit committee is responsible for ensuring that the relevant accounting rules and are prepared.
- The audit committee is responsible for reviewing and ensuring that the financial statement, business process, developing of the financial information are necessary to ensure the financial statement are complete and accurate.
- The audit committee is responsible for the appointment, providing the budget and oversight of the work of both internal and external auditor.
In brief, the audit committee’s responsibilities are oversight to the financial reporting and disclosure process, reviewing, and monitoring the accounting policies, regulatory compliance, internal control of the organization, the performance of internal auditor function. Furthermore, the audit committee is oversight to hire the top management in the audit division and hire an independent external auditor. In some cases, the audit committee also oversees the risk management in the organization.
The audit committee works closely with the board of directors while the importance and complexity of their responsibilities are assigned. Meanwhile, the qualified and expert in finance will be appointed at least one member to be effective in the audit committee roles.
The qualified and expert individual member can be experienced in both in working and training which is familiar with General Accepted Accounting Principles (GAAP), finance skill, accounting skill, understand on the complexity of the financial statement of the company, and also the internal control the organization which is stated in the audit committee functions.
Generally, the audit committee assists to the board of directors in oversight compliance function, cooperate governance, ensuring the effectiveness of internal control on business processes and internal audit functions which these subject matters directly implemented by the Chief Audit Executive (CAE).
The CAE should report and discuss directly to the audit committee in the subjects matter such are the compliance, organization’s financial, strategic, and another concerning matter regard to the audit strategy under the CAE’s review and responsibilities.
Internal Audit (IA) Report should be submitted to the audit committee at least quarterly by presenting the essential subject matter such are finding, process improvement for audited engagements.
Another report requires to submit to the audit committee are listed in the following points but not limited:
- Complete of assigned audit engagements
- Summary of the finding by monthly or quarterly
- Designed of internal audit department’s audit plan
- Budgeting for the internal audit department
- Process of the completion stage of the actual audit engagement performed compare to approval annual audit plan.
- The update of the status of the audit finding from the previous audits with the current implementation or still outstanding status.
- Current staffing and key staff vacancies resign/hired/replacement.
- Update of the unseen of special investigations
- Other subject matters contain in the designed of responsibilities of the audit committee.