IAI Actuarial Core Principles · Business Finance · Corporate governance and the regulation of companies
Which of the following is the most typical core responsibility of the audit committee of a listed company's board?
The audit committee typically reviews the integrity of the financial statements and oversees internal controls, internal audit and the relationship with the external auditor. Executive pay is for the remuneration committee, while strategy, dividends and borrowing terms are matters for management or the full board.
- ASetting the remuneration of each executive director
- BReviewing the integrity of financial statements and overseeing the internal control framework and the external auditor relationshipCorrect
- CSelecting the company's marketing strategy for the coming year
- DRecommending the dividend per share to be paid to promoters only
- Negotiating the company's bank borrowing terms
Explanation
The audit committee oversees financial reporting quality, internal controls, internal audit and the external auditor's independence and appointment. Setting executive pay belongs to the remuneration committee, and the other options are management or full-board matters.
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