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ACCA Strategic Professional · Strategic Business Leader · Management and internal control systems

Which of the following is a core responsibility of an audit committee in relation to the external auditor?

The audit committee recommends the appointment or removal of the external auditor and assesses their independence and effectiveness. It does not prepare audit papers, set management's accounting policies or run operations, because its role is oversight on behalf of shareholders.

  1. ARecommending the appointment and assessing the independence and effectiveness of the auditorCorrect
  2. BPreparing the audit working papers
  3. CDetermining the accounting policies that management must use
  4. DApproving day-to-day operational purchasing decisions

Explanation

Audit committees oversee the external audit relationship: recommending appointment or removal, agreeing fees, and assessing independence and effectiveness. Preparing working papers is the auditor's task, and setting policies and operational decisions are management matters.

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