Page 103 - Microsoft Word - 00 CIMA F1 Prelims STUDENT 2018.docx
P. 103
Corporate governance
Audit committee
3.1 General principles
There should be an audit committee to monitor the independence of the
external auditors
3.2 Typical roles and responsibilities
To monitor the integrity of the financial statements of the company and any
formal announcements relating to the company’s financial performance.
To review the company’s internal control and risk management systems.
To review the effectiveness of the company’s internal audit function.
To make recommendations re the appointment, reappointment and removal of
the external auditor, and to approve remuneration and terms of engagement.
To review and monitor the external auditor’s independence and objectivity and
the effectiveness of the audit process.
To develop and implement policy re non-audit services by the external auditor.
3.3 UK Corporate Governance Code
Should be 100% INEDs.
FTSE 350 – committee should have least 3 members.
Smaller listed companies – should have at least 2 members.
At least one member should have recent and relevant financial experience.
93
