EFFECTIVENESS OF AUDIT COMMITTEES

The Effectiveness of Audit Committees in Private Sector

[Name of the Author]

The Effectiveness of Audit Committees in Private Sector

Limitation & problem statement

It is observed that in today's world the role of audit committees play an important role in the providing clear transperancy to the stakeholders. The economic crisis and fraud have uncovered the dark side of the audit. Madoff was enough to falsify the audit reports to build the facade of credibility, his case has caused a flow of ink but little is known of his audit of which was the only customer, and the institutes of auditors and accountants have been silent, once more. This has exposed serious holes in oversight by the Securities and Exchange Commission (SEC), but has also shown that the control and regulation system has lost its reliability (Altman & McGough, 1974: 50).

The Enron scandal, ended with the disappearance of the auditing firm, Andersen. Worldcom fraud was uncovered due to the change of audit firm. In Spain, Banesto cases, PSV, and Gescartera, were backed by clean audits made ??by prestigious professional firms. And not just out of the maelstrom of fraud when we know more (Altman & McGough, 1974: 52). Therefore, Leandro Despouy, President of the Auditor General's Office, in Argentina, has called the situation properly, "the crisis of the supervisory bodies." However, few entities control officials accept it, but all agree on strengthening the public audit or audit institution. The problem is one of substance, if not recognized the seriousness of the audit, are useless diagnostic or proposals to change or restructure the supervisory bodies (Aharony & Swary, 1988: 275).

A thorough review of proposals to strengthen oversight institutions would indicate the failure to place their discipline, i.e., to the audit in the center of debate and reflection. For example, Leandro Despouy, says "The complete independence of the auditor is one of the prerequisites to ensure the objectivity of the audit. Today is so important to bring the auditor to people like him away from the interests it controls. This is the epilogue of the gigantic main scandal of corporate America, yet the cause of the collapse of the credibility of the leading private auditing the world, advising the same companies they audited” (Aharony & Jones, 1980: 1001).

Main research Question

Following are the research questions that will be analyzed in the proposed study:

What are the critical risks involved in accounting and financial reporting?

How much information should be shared with the audit committee?

What is the role and relevance of communication between the audit committee members (management, internal and external auditors)?

What elements should be included in a Schema developed for the effective utilization of the audit committee's time?

How can adherence to transparency requirements be beneficial for business concerns?

Objectives

The main objectives:

Control over financial reporting

Supervision of the principles of bookkeeping

Oversight of the Internal Control

Control over the selection and work of external auditors

Rationale for undertaking this study

The purpose of the study is to discuss current issues facing the auditing practices. The failure of the audit provides a ...