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Hi Gromit
hope all is well
i need one clarification on the role of internal audit. Lets suppose there is a company that has an audit committee in place then am i right in saying that in this case the internal audit should report to them in order to maintain their independence?
however what happens if there isn’t an audit committee? do we then have to recommend in the answer that the company should have one since its a sign of good practice in Corp Gov rules? ideally is it right to say that the internal audit dept has a dual reporting relationship since it must provide reports both to the management and the audit committe?
Audit committee helps IA to be independent.
If there is no AC, IA probably reports to the finance director – not good for independence. If there is and AC IA should report to them and they would report to management.
thanks gromit
i have one more confusion regarding the structure of audit committee. i read that AC should consist of at least three Non executive dirs. now what happens if a company has an AC that has 5 executive and 3 non executive dirs? isn’t there a threat here of undue influence within the audit committee since the amount of executive dirs exceed NEDS?
doesn’t the AC suppose to include NED ONLY?
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