Audit & Assurance, Chapter 3

The concept of corporate governance was introduced in chapter 1. In this chapter, we will look at the codes of practice that have been put in place to ensure that companies are well managed and controlled. The UK Corporate Governance Code is an internationally recognized code which we will use as an example of a code of best practice. The audit carried out by the external auditors is a very important part of corporate governance, as it is an independent check on what the directors are reporting to the shareholders.

We will also see the important role played by the audit committee, a sub-committee of board of directors. Its role is to oversee

- a company's risk assessment procedures

- and its financial statements

- and monitoring the internal audit function

- and the independence of external auditor.

External auditors liaise with the audit committee over the audit and internal auditors will report their findings about internal control effectiveness to it.