Welcome to free paper download website

Audit Committee established target evolution and revelation

Author: Anonymous From: www.yourpaper.net Posted: 2010-04-02 06:25:28 Read:
Author: Limeng Qing Li Qiuyan gold flowers
[Abstract] article by the Historical Review of the Development of the Audit Committee and the Audit Committee of motivation research literature review found that the motives were not established for the purpose of the audit committee and the establishment of audit committees of listed companies consistent. In response to this phenomenon, I make some suggestions for our audit committee system construction.
[Keywords] audit committee; goals; evolution; revelation

The audit committee concept first appeared in the 1939 United States Securities and Exchange Commission (SEC) investigation report Michelson Robbins (Mckesson & Robbins), proposed by the SEC established. After 60 years, countries have to follow the establishment of the Audit Committee; scholars from various countries also began the study of the system construction of the Audit Committee. Origin and the establishment of the Audit Committee's review of the original intention, in the history of the evolution of the process, whether the duty and mission of the Audit Committee was given a shift? Until now, domestic and foreign listed company have an audit committee, they establish the purpose of the Audit Committee to play how? In this paper, the purpose of the Audit Committee was established on the domestic and foreign scholars, combined with the Audit Committee the development of history, hope to give some thinking and inspiration for our audit committee system construction.

Audit Committee origin

The Michelson Robbins medicine company is registered and publicly traded companies on the New York Stock Exchange, the company and its related companies, more than 10 years of financial statements by the then enjoy a high reputation in the accounting firm Price the Walter House Company (hereinafter referred to as Pleasant) audit, and has been issued a "proper" advice. In 1939, the United States Mckesson & Robbins (Michelson Robbins) medicine company declared bankruptcy, the New York Stock Exchange (NYSE) entered the investigation found that the company's 1937 annual financial statements of close to U.S. $ 9000 million in total assets, pseudocolumn 1000 million. Pseudocolumn 9,000,000 of the company's receivables, auditors at the time of the review did not make inquiry, there is no physical inventory of inventories, but listen to the statement of the managers. Events available to the public, shocked by the auditing profession: the auditors not entirely professional duties, lack of verification procedures lead to financial fraud, resulting in damage to the interests of many investors. Thus, the public aloof independence of the external auditors questioned. In 1940, the SEC issued a statement, it is recommended that the external auditors, shareholders to vote on the nomination of non-executive directors nominated by the non-executive directors, this prototype of the Audit Committee began to form.
The 1965 collapse of the Atlantic Acceptance Corporation (AACL) Canada's first concern audit committee system. Compared with the United States earlier SEC Michelson Robbins, a survey report released Canadian survey evaluation Atlantic the acceptances company's corporate governance and financial situation, it is recommended that the financial statements reviewed by the Audit Committee prior to submission to the Board for approval . 1968 New York case of hearing the Scott & Barchris construction company proposed board of directors to those responsible for the errors and false financial information, and the punishment of four non-executive directors, to make people more aware of the establishment of the audit committee system of financial report the need for supervision.
From the view of the early development of the Audit Committee, the Audit Committee was originally established the reason is to ensure the independence of the external auditors in order to establish an organization to supervise the behavior of financial reporting fraud. In order to ensure the independence of the Audit Committee, the Audit Committee shall consist of non-executive directors.

Second, the establishment of the Audit Committee

The United States was the first country to begin exploration of the audit committee system. But nearly 30 years after the concept of the Audit Committee is, people just have to build awareness of the Audit Committee has oversight responsibilities, not on how to establish, how to set to take the the operability views and measures. True to force the United States began the Audit Committee was established course began in the 1970s.
The 1970 Watergate exposed the listed companies engaged in illegal political contributions and foreign bribery wrongdoing, regulatory awareness again evoke the wide-ranging discussion of the roles and responsibilities of the Audit Committee. In 1972, the SEC released "ASRNo.123 established audit committee composed of outside directors, to formally urge listed companies to establish an audit committee.
In 1974, the SEC issued Accounting Series announcement No. 165 (ASR), mandatory for listed companies to establish an audit committee. Been strongly advocated the establishment of the Audit Committee of the International Institute of Internal Auditors Association (IIA) published an article entitled "Internal Audit and Audit Committee: instructions for a common goal.", Described the situation of the Audit Committee.
In 1976, the SEC recommended that public companies should set up a permanent audit committee composed of independent directors. In 1977, the SEC released an official announcement, it is recommended that public companies should disclose the reasons for replacement of the external auditors, as well as to confirm whether the audit committee by the replacement decision. The same year, the NYSE also develop a policy requiring all in NYSE-listed companies must be no later than June 30, 1978 to establish an audit committee composed of independent directors.
From the historical process, the initial purpose of an audit committee is to improve the independence of the external audit of the financial statements authenticity. At the same time, improve the internal control environment, strengthening the internal audit also frequently mentioned. The mandatory requirements of the U.S. SEC, AICPA and the three major U.S. securities exchange, within a few years after 1978, large companies generally have established the audit committee system. It is worth noting that a survey showed that of the New York Stock Exchange, 1975, 80% of respondents have an audit committee, with the rise of the Audit Committee for 96% in 1979, in accordance with the independence requirements in the policy announcement, 90% The Audit Committee is composed entirely by the non-management members of the Board.

Audit Committee is in the world, further development

(A) United States
In 1987, a large number of cases due to fraudulent financial reporting litigation Certified Public Accountant. U.S. opposition to the false financial report of the Commission on Audit Committee issued a public report (Treadway Commission Report), the first time more specific guidance on the duties of the audit committee.
In addition to the responsibilities of the Audit Committee comments, Treadway Commission a proposal to the SEC that requires that all listed companies must be established by independent directors, audit committee, and should be in the annual reports of listed companies, including a The sealed letter signed by the Chairman of the Audit Committee of the Board of Auditors responsibilities and activities of the year. This proposal, the community has made a positive reaction, because its operating guidelines are more specific and have a relatively strong operability, many listed companies with reference to developed standards to measure the performance of the audit committee. However, SEC is not mandatory for listed companies to establish an audit committee. Since the SEC has not made a mandatory requirement, therefore, only a small number of listed companies disclosed in its annual report, the contents of the audit committee.
First stage: the United States General Accounting Office report with the relevant laws and the introduction of
The 1990s, with the company corruption and fraud operation, moral bankruptcy and business failure in large numbers, many agencies and organizations began to focus on the Audit Committee, the legislative branch this has also made a positive reaction to the law as a weapon to solve economic life issues. In 1991, the United States General Accounting Office (GAO) issued a report entitled "Audit Committee: ask for legislation to strengthen the banking supervision". This report is based on performance evaluation of the audit committee of the largest banks in the United States several attempts for the audit committee to seek legislative support, and had a greater impact in this regard. Since then, the relevant legislation be launched:
1.1991 promulgated by the Federal Deposit Insurance Reform Act (hereinafter referred to as FDICIA). GAO is the audit committee to seek legislative support of the same year, the U.S. Congress passed the Federal Deposit Insurance Reform Act. Apart from every one of the financial institutions are set all audit committee composed of outside directors, the bill also made more specific requirements, such as: the larger financial institutions (with total assets of more than U.S. $ 300 million), which The audit committee must contain two financial accounting, auditing or banking experience, personnel coordination with their legal advisers, and the agency's customers must not join the Audit Committee. In addition, FDICIA more clearly defined the responsibilities of the Audit Committee, for example, the audit committee should together with the authorities of the company's management, internal auditors and independent auditors to check the latest release on the company's internal control structure and procedures sex reports, and other reports required by the Act, at the same time review the company's annual financial report.
 1/3    1 2 3 Next Last
Please consciously abide by Internet-related policies and regulations.
Tips: Log in to comment, the user name to enter comments directly from your personal space, so that more friends to meet you.

Company Research latest papers

Sponsored Links

Company Research papers Ranking

Latest free papers

Sponsored Links

Top