Explain the meaning of the term ―audit committee and List and briefly explain the main functions of an audit committee

An audit committee is a panel of independent personnel in the client company that act as
‗watchdogs‘ over the company‘s auditing functions. They monitor the functions of the internal and external auditors and how management is implementing auditor‘s recommendations.

• Evaluate the competence and independence of the external auditor, especially of the partner who is leading the team. This is important for instance when the auditor involves himself in assisting the client in preparing accounts.
• Probe to find out the nature and extent of issues management and auditors give considerable attention to. The committee should especially wary of the areas of conflict between management and the auditor.
• Address issues to do with hiring and firing of staff. In the event of management hiring former employees of the company‘s audit firm into key positions, the audit committee should look into the matter.
• Keep management on their toes when it comes to implementing the recommendations of both the internal and external auditors.
• Ask and receive frank assessment of the competence of the financial management team.

• Question and enter into discussion with management on key financial policies and the need, if any to alter or review the existing ones.
• The audit committee should be the champions of corporate codes of conduct.

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