engleski

The Role of Audit Committee in Corporate Governance

In both the continental system of corporate governance, characterized by a two-tier management structure (Supervisory Board and Management Board), and the Anglo-American corporate governance system, where the roles of the Management Board and the Supervisory Board are integrated in a single Board of Directors with executive and non-executive directors, the audit committee is one of the specialized subcommittees to which relevant supervisory functions are delegated. In continental corporate governance systems the audit committee is a specialized subcommittee of the Supervisory Board, while in the Anglo-American system of corporate governance the audit committee is a specialized subcommittee to which some supervisory functions of the Board of Directors are delegated. Primary functions of the audit committee are most frequently related to the area of internal controls and risk management, financial reporting, compliance with legal regulations and the relevant fields and issues related to external and internal audit processes. Responsibilities and authorities of the audit committee are normally defined and recorded in the form of an audit committee charter. Beside a clear and precise definition of responsibilities, authorities and tasks of the audit committee, an important pre-requisite for its functioning in concrete situations is the appropriate appointment of its members and the determination of its internal organization and particularly of the issue of its cooperation with external and internal auditors and communication with management. In some countries audit committees are obligatory for listed business entities, while in others audit committees are established and function as an economic necessity and as a result of the need to delegate relevant supervisory functions. Apart from this, audit committees may have different responsibilities, depending on local business culture and specific circumstances in each company. When properly structured and assigned clear authorities, audit committees may be of great benefit to management, shareholders and other stakeholders, external and internal auditors. This paper therefore presents the relevant features and issues in regard to the role, organization, authorities and responsibilities of the audit committee.

corporate governance; audit commitee; management; financial reporting; risk management; internal control; external auditing; internal auditing

nije evidentirano