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Finance & Accounting
Pages 7 (1757 words)
Audit & Assurance Contents Contents 2 Introduction 3 Objectives of the Paper 4 Rights and Responsibilities of the Audit Committee 4 Assurance & Audit Process 6 Discussion & Analysis 8 Conclusion 9 References 11 Introduction This paper is an attempt to provide the understanding of the audit process and the role of the audit committees in post-crisis financial markets and how effectively they have been supervising the audit process and bringing transparency in financial disclosures.
Therefore US introduced the Sarbanes Oxley Act in 2002 and UK, in 2003, set up two reviews- RRAP (Regulatory Regime of Accountancy Profession) and CGAA (Coordinating Group on Audit and Accounting) (Gray & Manson, 2007, p.140). The audit committee consists of board of directors who are entrusted with the oversight of financial reports preparation and disclosures. The more reliable the information is the more it is useful and through the auditing this purpose is achieved. The shareholders of a company are its owners who appoint the stewards in the form of directors and managers to manage the company on their behalf. The problem arises when the stewards place their personal interests before the owners’ interests. And as the managers are at an advantage over shareholders in terms of information the auditing (both internal and external) functions become all the more important. The recent financial crisis has led to the requirement of enhancing the transparency on the manager’s activities and their risk management. The identification, analysis and management of the operational as well as strategic risk are the key to avoid failures of firms if the crises were to occur in future. ...
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