A key element in the corporate governance process of any organisation is its audit committee (Source: aicpa.org)
Audit Committees can be seen as a means to enhance the independence of the auditor, and also seen as an important role in reviewing and monitoring the 'external auditors' independence, objectivity and the effectiveness of the audit process. (Source: The Audit Process pg. 669)
2.1 The compositions of audit committees are very important. The majority of non-executive directors should be independent and free from any financial relationship, which could interfere with independent judgement. To qualify as "independent," the Act states that an audit committee member cannot accept any fees from the company other than for serving as a director, and cannot be an affiliated person of the company or any of its subsidiaries (Source: nysscpa.org). According to the Combined Code (which lists sets of requirements and sets the frame work for auditors (Source: The Audit Process)) its says that committees should comprise of at least three non-executive director and that it highlights certain duties for external auditors, internal auditor and the internal controls that have been put in place. (Source: The Audit Process pg. 669)
2.2 Audit Committees have many authorities and duties, they have clear rights to seek information and make decisions and carry out prescribed ...