Audit Committee Effectiveness

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Questions and Answers

An effective audit committee is defined as one with ______ members.

qualified

The main responsibilities of the audit committee include ensuring reliable financial ______.

reporting

The audit committee provides oversight on ______ controls.

internal

An effective audit committee plays a role in managing ______.

<p>risk</p> Signup and view all the answers

De Zoort (2002) emphasizes the importance of diligent ______ efforts in an audit committee.

<p>oversight</p> Signup and view all the answers

Flashcards

Effective Audit Committee

An audit committee is effective when its members are qualified, have the power to act, and have the resources they need to protect the interests of stakeholders.

What does an audit committee do?

They ensure that financial reports are reliable by checking if they accurately reflect the company's financial situation.

How do audit committees oversee internal controls?

They make sure that internal controls, like procedures and checks, work properly to prevent fraud and errors.

What is the audit committee's role in risk management?

By reviewing and challenging how the company manages risks like economic downturns or cyberattacks.

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What gives an audit committee power?

They have the authority to ask questions, get information, and make independent judgments.

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Study Notes

Audit Committee Effectiveness

An effective audit committee, according to De Zoort (2002), possesses qualified members.
These members have the authority and resources to safeguard stakeholder interests.
This is achieved by ensuring accurate financial reporting.
It also involves overseeing internal controls and risk management.
Diligent oversight efforts are crucial for effectiveness.