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IAI Actuarial Core Principles · Business Finance · Regulation of financial reporting of incorporated entities

What is the main role of an audit committee of a listed company's board in relation to the external auditor?

The audit committee oversees the integrity of financial reporting, the audit process and the external auditor's independence, and recommends the auditor's appointment. It does not carry out the audit, dictate the opinion, or prepare the financial statements, which remain management's responsibility.

  1. ATo perform the external audit jointly with the auditor
  2. BTo oversee the auditor's independence, the audit process and the integrity of financial reporting, and to make recommendations on appointmentCorrect
  3. CTo set the auditor's opinion before the audit is completed
  4. DTo approve the company's marketing budget
  5. To prepare the financial statements for the shareholders

Explanation

The audit committee, made up mainly of independent directors, oversees financial reporting integrity and the relationship with the auditor, including independence and recommending appointment. It does not carry out the audit, dictate the opinion or prepare the accounts.

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