Which of the following statements is correct about corporate governance? a.The Chief Executive Officer (CEO) of the company should serve as the chairperson of the audit committee. b.The internal auditors should report directly and solely to the Chief Executive Officer (CEO).c.Members of the Audit committee should meet regularly to discuss financial reporting issues. d.All listed companies are required by Corporations Law to have an audit committee.e.The audit committee's main responsibility is to improve the audit client's profitability
Question
Which of the following statements is correct about corporate governance? a.The Chief Executive Officer (CEO) of the company should serve as the chairperson of the audit committee. b.The internal auditors should report directly and solely to the Chief Executive Officer (CEO).c.Members of the Audit committee should meet regularly to discuss financial reporting issues. d.All listed companies are required by Corporations Law to have an audit committee.e.The audit committee's main responsibility is to improve the audit client's profitability
Solution
The correct statement about corporate governance is c. Members of the Audit committee should meet regularly to discuss financial reporting issues.
Here's why:
a. The CEO serving as the chairperson of the audit committee could lead to a conflict of interest, as the CEO is part of the management team that the audit committee is supposed to oversee.
b. Internal auditors should not report solely to the CEO. They should also report to the audit committee to ensure independence and objectivity.
c. This is correct. Regular meetings of the audit committee are essential for effective financial oversight and for addressing any issues related to financial reporting.
d. Not all listed companies are required by Corporations Law to have an audit committee. The requirement varies depending on the jurisdiction and the specific regulations applicable to the company.
e. The main responsibility of the audit committee is not to improve the audit client's profitability. Instead, its primary role is to oversee the company's financial reporting process, internal controls, and risk management systems.
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