Discuss about Identified That the Independent Directors with the Financial?
It is identified that the independent directors with the financial experience are crucial for the audit committee as the benefit is associated with the reduction of the earning restatement. Further, the independence of the audit committee reduces the proxy for the management of earnings as well as the abnormal accruals. Moreover, it is found that the benefit of independency is not obtained where all the directors are independent, but it is obtained where majority of the members from committee are independent. Further, if the member has experience of finance and accounting, he will be able to perform his task more efficiently by using his experience, skills and knowledge (Plastow, Gallery & Gallery, 2012).
The audit committee of GrainCorp was established to assist the board for fulfilling their responsibilities with regard to the internal control and financial reporting. They are further responsible for the procedure of financial reporting, internal control procedure, managing the financial risks and supervise the independence, performance, coverage, processes related to the external as well as the internal functions of the auditors.
The board audit committee of GBC includes majority of independent directors and involves at least 1 member who is having the formal qualification of finance, wherever possible. Every member has the required experience and skills that is suitable for the business of the company. Further, the chairman of the board of board audit committee is an independent director and he is not the chairman of the board. The BAC meets with the external auditor at least twice per year and at least once per year with the internal auditor. Further, they meet with the taxation advisor of the company at least once in a year. The BAC is responsible for the following:
- Report to the board regularly regarding the activities of BAC and making appropriate recommendations
- Analyse whether the management is applying proper internal control or not
- Get a fair idea about the financial status of the business
- Review the annual and half-yearly statements of finance and determine whether they are complete in all respect
Plastow, K., Gallery, G., & Gallery, N. (2012). On the efficacy of key corporate governance recommendations in mid-tier companies: window-dressing or value-adding?. Proceedings of the 2012 Accounting and Finance Association of Australia and New Zealand, 1-29