In the wake of recent corporate reporting failures stakeholders, the investor community and the regulator are sharpening their focus on director’s responsibilities and how effectively these responsibilities are discharged.
The PwC Audit Committee Guide is designed to help audit committee members work through the maze of director’s responsibilities.
Audit committees do not prepare financial reports, nor do they conduct audits. But they have an essential role to play in ensuring the integrity and transparency of corporate reporting.
The corporate reporting process consists of different elements in terms of providing financial information to capital markets. Management, the board and the external auditor have distinct but overlapping roles to play, and it is important for each group to understand the other roles as well as its own. The corporate reporting supply chain, illustrated on this page, shows the interrelationship between the elements.
The audit committee, a subcommittee of the main board acting under delegated authority - provides key links between these groups. It can ease pressure on a busy board because it can take time to address financial reporting and internal control issues. And by providing a primary focus for discussions with internal and external auditors, it enables both sets of auditors to boost their independence.
Thousands of pages of rules on corporate governance have been issued. However, regulations seldom provide helpful guidance on how the audit committee should go about its work. What knowledge or experience is required? Which areas should it focus on? How should its activities be communicated?
Our Audit Committee Guide, Director’s responsibilities: How audit committee members add value, is designed to help audit committee members answer these questions.