Assignment1概要1.doc

Audit committee and the governance of financial and other reporting Name: SILIANG JIA (MAX) Student No: Due date: 13/02/2014 Tutor: Samuel Komakech Programmed: Governance and Sustainability Ending Data: 13/02/2014 Audit committee system is an important institutional arrangement in the companys governance structure in the UK. Primary duties of the Audit Committee include oversight of the companys financial report, the strengthening of internal control (in order to increase the companys financial reports for accuracy and authenticity), risks’ voidance and the protection of investors interests. Based on the Cadbury report in 1992 which established the audit committee system, Smith (2002) provides a comprehensive review of the implementation of the system and recommends that its reform. By reviewing the 2002 smith report and the relevant literature, this paper attempts a comprehensive analysis of the Audit Committee of the British system, including its institutional development, consisting of duties, operations, members, appointment, training, relations with the board, and the relationship with shareholders, etc. Besides, it will make recommendations on the development and improvement of the Audit Committee on the end of the report. Since the late 80’s, corporate governance has become an international issue which are common interests and research by economists and jurists around the world. Traditional corporate governance research is based primarily on Berle and Means famous theory – ‘The Separation of Ownership and Control’. Shareholders who have the funds but lack of management capacity entrust the management of the company to who have management skills but lack of funds for company managers. Widespread separation of ownership of listed companies led to the ageing problem. Therefore, as how to constrain managers and to make managers and shareholders interests converge, thus reducing agent costs, has become the co