Audit Committee
Lukáš Pečeňa
Coordinator for
FM&C and Audit
Ministry of Finance of
the Czech Republic
Purpose of audit committee
• Owners are trying to
maximize long – term
value.
• Management seeks to
maximize short-term profit.
„Management don`t always have the
same goal as board have.”
Ministry of Finance of
the Czech Republic
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The audit committe is the
board’s agent for assurance…
• Management
• Runs the organization
• Have full knowledge of its
operations
• Is responsible for their activity
• Internal audit
• Examines the critical risks
• Is independent of management
operations
• External audit
• Examines the financial statements
• Offers independent opinion of both
management and internal audit
Ministry of Finance of
the Czech Republic
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Audit Committee Responsibilities
• Oversee the institution’s policy
• Oversight risk management
• Oversight of internal audit
•
•
•
Approve an internal audit plan
Monitor audit activity’s performance
Adequacy of management response to issues identified by
audit
• Adequacy of resources of the audit activity
• Approve HR issues (recruitement, appointment, removal of the
CAE)
• Oversight of external audit
• The effectiveness of the Audit Committee’s own work – value for
money
Ministry of Finance of
the Czech Republic
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The ideal public audit
committee structure
2 years < Appointed of terms < 8 years
Ministry of Finance of
the Czech Republic
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Hurdles to overcome when
setting up audit committees
• Composition of audit committees
• Administrative burden and cost of audit committees
• Committing Officers and governance bodies on audit
committees
Ministry of Finance of
the Czech Republic
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What is the lesson to learn?
• Important and iconic people that lead the audit committee
• AC fulfills the role of a kind of Supervisory Board for the
management.
• AC takes over control function. Board is able to focus on
management and developement.
• AC is responsible for implementation international audit
standart principles.
• Publish annual reports on the activities of individual
departments.
Ministry of Finance of
the Czech Republic
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