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audit committee

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › audit committee

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by Kim Smith.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • February 11, 2019 at 10:36 am #504741
    toushiga
    Participant
    • Topics: 424
    • Replies: 172
    • ☆☆☆☆

    Hello Sir,
    in the Past year Question June 2016,the question 1 Section b for the recommendation answer :
    “Further consideration should be given to establishing an internal
    audit function. Having an internal audit function will help the
    audit committee to discharge their responsibility for monitoring
    internal controls.”

    Will the audit committee monitoring the internal control if no internal audit department? will they not just only review the internal control system and no monitoring the internal control directly?
    as its conflict with the kaplan textbook said:

    “The core functions of audit committees are oversight, assessment and review. It is not the duty of the audit committee to carry out functions that belong to others. For example, they should make sure there is a proper system in place for monitoring of internal controls
    but should not do the monitoring themselves”

    Hope Tutor can clarify this for me,Thank you very much.

    February 11, 2019 at 11:40 am #504754
    Kim Smith
    Keymaster
    • Topics: 134
    • Replies: 8304
    • ☆☆☆☆☆

    The UK Code states: “Many of the core functions of audit committees set out in this guidance are expressed in terms of ‘oversight’, ‘assessment’ and ‘review’ of a particular function. It is not the duty of audit committees to carry out functions that properly belong to others, such as the company’s management in the preparation of the financial statements or the auditors in the planning or conducting of audits. To do so could undermine the responsibility of management and auditors.”
    So re your 1st quote I would say either of the following would be more accurate:
    “Having an internal audit function will help the BOARD to discharge its responsibility for monitoring internal controls.” or
    “Having an internal audit function will help the audit committee to discharge its responsibility for OVERSIGHT of management’s monitoring internal controls.”
    Note that in the Kaplan quote the example of monitoring is not the same as the example I have quoted above from the Code. The monitoring function would only “properly belong” to internal audit, if there is an internal audit function. But an internal audit function is not mandatory.
    The Code also states “The board has ultimate responsibility for an organisation’s risk management and internal control systems, but the board may delegate to the audit committee some functions to assist the board in meeting this responsibility.”
    So although the audit committee would not monitor controls where there is an internal audit function for that purpose, that does not preclude the audit committee from a monitoring role where there is no internal audit.
    So rather than say that either the answer or the text you quote are wrong – I would say that they can be reconciled.

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