PracticeAuditThe new audit committee regime

The new audit committee regime

Here is a summary of the rules proposed by the Smith report:

Link: Higgs’ report

Audit committees should:

  • have at least three independent NEDs;
  • have at least one member with significant and relevant financial experience;
  • monitor the integrity of financial statements and review reporting decisions;
  • review the internal financial control systems and risk management systems;
  • review the effectiveness of internal audit;
  • recommend the external auditor for appointment and provide an explanation in the annual report in the event of any disagreement with the company board;
  • review external auditor’s independence, objectivity and effectiveness;
  • develop policy on taking non-audit services from the external auditor.

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