Accurate, credible and reliable financial reporting is critical for the effective functioning of the world’s capital markets and the protection of the interests of stakeholders who rely on such information for their
decision making. Directors of companies are also experiencing increased pressures and are facing new challenges from developments in legislation, regulations, corporate governance requirements and a
changing business environment. This has not only given rise to new and changing responsibilities, but has also increased the legal liability of directors and audit committee members alike.

Against this background, a well-established, properly constituted audit committee that has the authority and resources to effectively discharge its responsibilities and that consists of members who act independently and who have the right mix of appropriate experience, financial literacy and financial expertise among their members can play a critical role in the governance structures of entities by assisting directors to meet their financial reporting and related responsibilities and to protect the interests of all stakeholders. Audit committees will be of value, however, only if they are properly constituted and are functioning effectively, and if their role is clearly understood by all the parties concerned. With the audit committee’s role evolving and being widely recognised as the most important committee of the board and the shareholders alike, it is critical that such committees are effective in fulfilling their responsibilities. The Companies Act, 2008, which became effective 1 May 2011, and the requirements of King III, effective from 1 March 2010, also pose new challenges and increased responsibilities for audit committees.

This guide is aimed at providing guidance to audit committee members and audit committee chairs on how to be effective in their functioning and the performance of their oversight responsibilities on their boards’ behalf. It will also be of value to directors, prescribed officers, company secretaries and other company functionaries to understand the role and responsibilities of the modern-day audit committee in the governance structures of companies. The guide can be used by all interested parties, whether active in the private or in the public sector.

We trust that the guide will be of value to all our existing and future prospective clients in understanding what it takes for audit committees to be effective and to obtain the maximum benefit from them.

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Audit Committee Guide