Audit Essay Sample: Responsibilities Related to Financial and Business Risk

Companies have to ensure that they prepare financial statements and implement internal controls that are aimed at matching their financial position within the market. Microsoft is a global entity and has stipulated its models and responsibilities of the audit committee that needs to be fulfilled by all members. One of the responsibilities that are in line with ensuring it mitigates business and financial risks is reporting on the internal controls that are employed and their effectiveness over financial reporting within the company (Microsoft Audit Committee Report, 2015). Internal controls are pertinent in looking to develop the best processes and means that are critical in giving the individuals the best basis to prevent business and financial risks. Review of business and financial risks with the management is also one of the important roles for the audit committee. The board needs to make an assessment of the models that the company is using to meet these risks and how useful the risk management tools are in mitigating the risks that are assessed in the enterprise. The audit committee acts as an advisor to the management, thereby effectively reporting and reviewing all the different controls and procedures that have been developed. These are important in understanding the related risks that are inherent or otherwise in these transactions and their effects on the company as a whole.

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Number of Times That the Committee Meets

The audit committee meets at least twice in each quarter meaning that it can meet for a minimum of eight times in a fiscal year (Microsoft Audit Committee Report, 2015). The number of times that the committee meets can also increase depending on the issues that are at hand with meetings being called to address matters such as compliance and other integral aspects of the company. In each quarter one of the meetings is held with the management where the committee updates the management and appropriates on the tools and approaches that are being used by the entity (Microsoft Audit Committee Report, 2015).

Authority of the Committee

The committee has independent authority to ensure that it is not influenced in making its reports and fulfilling its responsibilities. However, the committee has to report to the management and advice the management on internal controls and financial reporting. The committee has to have the independence in its structures and means, therefore, ensuring that it does not compromise its position (Braittora et al. 2010). The primary responsibility of the auditing committee is to ensure that it reports and gives relevant advice that is essential to the stakeholders. Auditors have a responsibility to the stakeholders and potential investors who need the audit reports to make an assessment of the company.

Audit Committee at Apple Company

The audit committee at Apple Company is tasked with overseeing and advising the management on the internal controls and financial reporting within the company. The entity looks to integrate the internal auditing committee in the decision-making process to ensure that it tackles and mitigates the financial and business risks. The risk management processes within the company are critically examined to ensure that it meets the required standards to reduce any inherent or other hazards that may face the entity.

The audit committee meets at least once per quarter in a fiscal year to ensure that they give their reports to the management and advice on different aspects facing the company. The committee, therefore, meets at least four times and can meet on more occasions if necessitated by aspects facing the entity.

The audit committee at Apple is also independent and does not have a responsibility towards any authority. It is an independent body that reports accurate information and data to ensure that people make informed choices. It, however, advises the management and is required to work closely with the management to achieve the targeted goals and objectives.

Comparison and Contrast between the Two Companies

The role of the auditors is universal and is similar across many major companies. As an independent authority, the companies have similar approaches to auditing since these are the underlying principles that are pertinent in auditing (Engel et al., 2010). Albeit the number of times that the auditing committee meets, the other aspects of auditing and its responsibilities are similar to both companies.

References

Braiotta Jr, L., Gazzaway, R. T., Colson, R., & Ramamoorti, S. (2010). The audit committee handbook. John Wiley & Sons.

Engel, E., Hayes, R. M., & Wang, X. (2010). Audit committee compensation and the demand for monitoring of the financial reporting process. Journal of Accounting and Economics, 49(1), 136-154.

Microsoft Audit Committee Report (2015). Retrieved from https://iiwisdom.com/msft-2015/audit-committee-matters/