(a) Define the term "audit committee." (b) Discuss the potential benefits that could accrue to an organisation that sets up and maintains an audit committee.

a) Audit committee
This is a sub- committee of the board of directors, usually containing a number of non-executive
directors charged with the responsibility of overseeing the financial management of the
company.

b) Benefits that could accrue to the organization that sets up and maintain audit
committee
- Audit committee improves the quality of financial reporting, by reviewing by reviewing
the financial statements on behalf of the board
- Audit committee helps the finance the finance director, by providing a forum in which he
can raise issues of concern and which he can use to get things done which might
otherwise be difficult.
- Strengthens the position of the external of the external auditor, by providing a channel of
communication and forum for issues of concern
- Audit committee increases public confidence on the credibility of the linancial statements
- Audit committee will create climate of discipline and control which reduce the
opportunity for fraud in the organization
- Audit committee provide a framework within which the external auditor can assert his
independent in the event of dispute with the management
- It enables the non-executive directors to contribute an independent judgment and play a
positive role

---

Kavungya answered the question on May 14, 2019 at 12:13