The Board and Audit Committee Prof G. E. Oyedokun.pptx

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The Board and Audit Committee:
Enhancing the Board and Audit Committee Role
Being a Virtual Training presented to Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN) on
Thursday 27th July, 2023
Prof. Godwin Emmanuel
Oyedokun
Professor of Accounting and Financial
Development
Department of Management & Accounting
Faculty of Management and Social Sciences
Lead City University, Ibadan, Nigeria
Principal Partner; Oyedokun Godwin Emmanuel &
Co
(Chartered Accountants, Tax Practitioners &
Forensic Auditors)

ND (Fin), HND (Acct.), BSc. (Acct. Ed), BSc (Fin.), BSc. (Bus. Admin), MBA (Acct. & Fin.), MSc. (Acct.), MSc. (Bus & Econs), MSc (Tax),
MTP (SA), PhD (Acct), PhD (Fin), PhD (FA), FCA, FCTI, FCIB, ACS, ACIS, MNIM, FCNA, FCFIP, FCE, FERP, CICA, CFA, CFE,
CIPFA, CPFA, ACAMS, ABR, CertIFR, IPA, IFA, FFAR, FPD-CR, FSEAN, FNIOAM, ACIrb

Contents
Introduction
Board of Directors
Overview
Background of Audit
Committee
Statutory Audit
Committee Section
404 CAMA 2020
provisions
Internal and External
Auditors
Roles of Audit
Committee in
enhancing good
Corporate Governance
Ways to Enhance the
Board and Audit
Committee Role
Conclusion and
Recommendation

Introduction
The audit committee plays a major role in corporate governance regarding the organization’s
direction, control, and accountability
Corporate governance is very important in our business world today, it is a system used to direct and
control an organization which includes relationships between, and accountability of, the organization’s
stakeholders, as well as the laws, policies, procedures, practices, standards, and principles which may affect
the organization’s direction and control
As a representative of the board of directors and main part of the corporate governance
mechanism, the board’s key purpose “is to ensure the company's prosperity by collectively
directing the company’s affairs, while meeting the appropriate interests of its shareholders
and relevant stakeholders”
The board management capabilities are essential, an audit committee helps to ensure the
company’s financials and compliance with laws and regulations are up to task

Introduction
The audit committee is involved in the organization’s both internal and external audits,
internal control, accounting and financial reporting, regulatory compliance, and risk
management
Often the respective organization has “terms of reference” which clearly shows the activities
and responsibilities of the audit committee
The board of directors and its committees (including the audit committee) rely on the
organization’s management to run the daily operations
Audit committee activities and responsibilities are to oversee and monitor the organization’s
overall financial performance, especially the preparation of its financial statements,
managerial financial reports, effectiveness and efficiency of the organization’s internal
control, and the performance of both internal and external auditors

Board of Directors Overview
Within a company, the board of directors is the principal agent of
risk taking and enterprise, the principal maker of decisions,
commercial and other judgements
Discharging these responsibilities means thinking not only about
particular tasks but also about ways of working as a board, and
ensuring individual directors can be fully equipped to play their part
The board is also encouraged to focus on those tasks that it must or
wishes to undertake itself, and to decide which should more
properly be carried out by senior management or otherwise

Board of Directors Overview
Many boards of larger companies devise a schedule of reserved powers that
explicitly distinguishes between those tasks that are to be the sole responsibility
of the board and those that can legitimately be devolved to senior managers
These activities are normally undertaken by the Chair, part of whose role is to
manage board business and act as its facilitator and guide
Where the managing director is also the Chair, it is important that these two
distinct roles are properly separated and that sufficient attention is given to
carrying out the Chair’s role effectively
The board should not just be an executive team

Board of Directors Sect. 87 (1)-(6) (CAMA 2020) Provisions
1. A company shall act through its members in general meeting or its board of directors or through
officers or agents appointed by, or under authority derived from, the members in general meeting or
the board of directors.
2. Subject to the provisions of this Act, the respective powers of the members in general meeting and
the board of directors shall be determined by the company’s articles.
3. Except as otherwise provided in the company’s articles, the business of the company shall be
managed by the board of directors who may exercise all such powers of the company as are not by
this Act or the articles required to be exercised by the members in general meeting.
4. Unless the articles otherwise provide, the board of directors, when acting within the powers
conferred upon them by this Act or the articles, is not bound to obey the directions or instructions of
the members in general meeting provided that the directors acted in good faith and with due
diligence.

Board of Directors Sect. 87 (1)-(6) (CAMA 2020) Provisions
5. Notwithstanding the provisions of subsection (3), the members in general meeting may:
(a) act in any matter if the members of the board of directors are disqualified or
unable to act because of a deadlock on the board or otherwise;
(b) institute legal proceedings in the name and on behalf of the company, if the
board of directors refuse or neglect to do so;
(c) ratify or confirm any action taken by the board of directors; or
(d) make recommendations to the board of directors regarding action to be
taken by the board.
6. No alteration of the articles invalidates any prior act of the board of directors which
would have been valid if that alteration had not been made.

Functions of the Board
i. Establishing vision, mission and values
a. Determining board composition and organisation
b. Clarifying board and management responsibilities
c. Planning and managing board and board committee meetings
d. Developing the effectiveness of the board
ii. Setting strategy and structure
a. Review and evaluate present and future opportunities, threats and risks in the external
environment; and current and future strengths, weaknesses and risks relating to the
company.
b. Determine strategic options, select those to be pursued, and decide the means to
implement and support them.
c. Determine the business strategies and plans that underpin the corporate strategy.
d. Ensure that the company’s organisational structure and capability are appropriate for
implementing the chosen strategies.
e. Determine the company’s appetite for risk and to engage in the process of backing a robust
risk management programme focused in the company’s business and the area(s) of its
activities.

Functions of the Board
iii. Delegating to management
a. Delegate authority to management, and monitor and evaluate the implementation of
policies, strategies and business plans
b. Determine monitoring criteria to be used by the board
c. Ensure that internal controls are effective
d. Communicate with senior management
iv. Exercising accountability to shareholders and being responsible to relevant stakeholders.
a. Ensure that communications both to and from shareholders and relevant stakeholders are
effective
b. Understand and consider the interests of shareholders and relevant stakeholders.
c. Monitor relations with shareholders and relevant stakeholders by the gathering and
evaluation of appropriate information
d. Promote the goodwill and support of shareholders and relevant stakeholders

Responsibilities and Challenges of the Board
 It is for the board to judge, on a case-by-case basis, which stakeholders it treats as ‘relevant’ and which
of their interests it is appropriate to meet, considering the law, relevant regulations and commercial
considerations
 In pursuing this key purpose, a board of directors faces a uniquely demanding set of responsibilities
and challenges
 It also faces a range of objectives that can sometimes seem contradictory as follows:
 i. Must simultaneously be entrepreneurial and drive the business forward while
keeping it under prudent controls.
 ii. It is required to be sufficiently knowledgeable about the workings of the
company to be answerable for its actions, yet able to stand back from the day- to-
day management of the company and retain an objective, longer-term view.
 iii. Must be sensitive to the pressures of short-term issues and yet take account of
broader, long-term trends.
 iv. Must be knowledgeable about ‘local’ issues and yet be aware of potential or
actual wider competitive influences.
 It is expected to be focused on the commercial needs of its business while acting responsibly towards
its employees, business partners and society.

The Background of Audit Committee
An audit committee plays a critical role in safeguarding a company’s financial stability. Audit committee was first
endorsed in 1939 by the New York Stock Exchange (NYSE)
During the 1970s, the audit committee’s role was very welcome due to the great demands for corporate governance
and corporate accountability (Spangler and Braiotta, 1990)
In 1972, the U.S. Securities and Exchange Commission (SEC) was the first to recommend that public companies should
create audit committees comprised of directors from outside the relevant companies’ managements
In 1977, the NYSE required that all audit committee members should be independent directors. In its Statements on
Auditing Standards (SAS 61), the American Institute of Certified Public Accountants (AICPA, 1988) issued
“Communication with Audit Committees” regarding the relationship between the audit committee, external auditors,
and management of public companies

The Background of Audit Committee
In 1999, the Blue-Ribbon Committee (BRC, 1999) recommended major rule changes, related to improving the effectiveness of
the corporate audit committee
Later, after the corporate collapse of Enron, WorldCom, and others, the Sarbanes-Oxley Act was passed by the U.S. Congress in
2002 giving more power to audit committees, especially regarding whistleblower and disclosure requirements
The Sarbanes-Oxley Act of 2002 increased audit committees’ responsibilities and authority
It raised membership requirements and committee composition to include more independent directors
Companies were required to disclose whether a financial expert is on the Committee
In addition, the SEC and the stock exchanges proposed new regulations and rules to further strengthen audit committees

Concept of Audit Committee
An audit committee is a statutory board committee of a company that oversees financial reporting, risk
management, and compliance processes
Composed of independent directors with relevant expertise, the audit committee acts as a key safeguard to
ensure transparency, integrity, and accountability in a company’s financial operations
The executive board, consisting of CEOs, COOs, and CFOs, appoints the audit committee to protect the
shareholders’ and stakeholders’ interests
The executive committee and the audit committee work closely together to enhance the overall governance
of the company structure, contributing to its long-term sustainability and success
It is compulsory in many countries that all publicly held companies should have an audit committee, many
non-public companies have audit committees voluntarily established for better oversight and monitoring of
these companies’ financial and accounting performance
It should be emphasized that the audit committee should include both independent and financial expert
members to guarantee at least the minimum level of audit quality and strong corporate governance

Concept of Audit Committee
 In addition to independence, competency is also taken into consideration as regards the composition of audit
committee members
 The big four CPA firms, Price Waterhouse Coopers, Deloitte, Ernst & Young, and KPMG, as well as the Committee
of Sponsoring Organizations (COSO) recommended certain oversight practices for audit committees to follow,
providing guidelines about the audit responsibility in evaluating and strengthening corporate controls
 The SEC confirmed its interest in audit committees by:
 i. Urging registrants to form audit committees comprised of outside directors;
 ii. Requiring all publicly held companies’ proxies to disclose information about the existence
and composition of their audit committees;
iii. Requiring publicly held companies to state the number of audit committee meetings
held annually and to describe their audit committees’ function.

Audit Committee in Corporate Governance
Independent oversight
• Audit committees consist of independent directors not involved in the company’s day-to-day operations
• This independence helps ensure the company’s interests aren’t based on biases
Enhanced financial reporting
• Audit committees review financial statements, assess the adequacy of accounting policies, and ensure compliance with relevant regulations and accounting
standards
• This oversight helps to maintain the accuracy and reliability of financial information, providing confidence to investors and other stakeholders
Risk management and internal controls
• Audit committees monitor and evaluate the effectiveness of a company’s internal controls and risk management systems to safeguard the company’s assets
and minimize the chances of fraud or mismanagement
Compliance and ethical standard
• Audit committees ensure the organization operates within the boundaries of laws and regulations and its ethical standards
• This supervision is vital for maintaining the company’s reputation, integrity, and ethical practices
Build relationships with external auditors
• Audit committees select, appoint, and oversee external auditors’ work
• They maintain direct communication with auditors, ensuring their independence, objectivity, and effectiveness
• This relationship helps foster a robust auditing process and promotes open dialogue between the auditors and the committee
• With the help of a committee charter, audit committees provide an essential governance mechanism that helps instill confidence in the financial reporting
process, ensures compliance, and mitigates risks

Composition of Audit Committee
(Comparative Analysis Between the Old and New CAMA)
The Companies and Allied Matters Act, 2020 (“CAMA 2020”) has changed
the previous provisions in the repeal CAMA on the composition of the
statutory audit committee for public companies
In the repealed CAMA, the composition of the audit committee of
public companies was six (6) members with an equal number of
shareholders and directors
However, in subsection (2) CAMA 2020, the audit committee of a public
company should have 5 (five) members i.e., 3 (three) shareholders and
2 (two) non-executive directors, the members of the audit committee
are not entitled to remuneration and are subject to election annually

Composition of Audit Committee
(Comparative Analysis Between the Old and New CAMA) con’t
 This provision is in line with the principles of the Nigerian Code of Corporate Governance 2018 which provides that at least
one member of the audit committee should be “…a financial expert…have current knowledge in accounting and financial
management and be able to interpret financial statements”
i. Public companies should review the composition of their audit committees to ensure conformity
with the provisions of CAMA 2020 with respect to the number and qualification of the committee
members.
ii. The audit committee shall examine the auditors’ report and make recommendations thereon to the
annual general meeting as it may deem fit.
iii. All members of the audit committee shall be financially literate, and at least one member shall be a
member of a professional accounting body in Nigeria established by an Act of the National
Assembly.
iv. Any member may nominate another member of the company to the audit committee by giving
written notice of such nomination to the secretary of the company at least 21 days before the
annual general meeting and any nomination not received prior to the meeting as stipulated is
invalid

Functions and Powers of Audit Committee
Ascertain whether the accounting and
reporting policies of the company are in
accordance with legal requirements and
agreed ethical practices
Review the scope and planning of audit
requirements
Review the findings on management
matters in conjunction with the external
auditor and departmental responses
thereon
Keep under review the effectiveness of
the company’s system of accounting
and internal control
Make recommendations to the board
regarding the appointment, removal
and remuneration of the external
auditors of the company
Authorise the internal auditor to carry
out investigations into any activities of
the company which may be of interest
or concern to the committee

Responsibilities of Audit Committees
The audit committee has always had a role to play in the relationship with company auditors
and approving various types of services provided by auditors
The Corporate Laws Amendment Act (CLAA) created an obligation on widely held companies to
appoint an audit committee and set out certain specified duties
The new Companies Act, 71 of 2008 (the Act), identified the audit committee as a statutory
board committee that all public companies or state-owned companies, or other companies that
have voluntarily decided to have an audit committee, shall have appointed by shareholders, not
the Board of Directors
Previously the audit committee was a sub-committee of the Board

i. Financial Auditing Reporting
• Audit committees thoroughly review the financial reports prepared by management, including the balance sheet, income
statement, cash flow statement, and accompanying notes
• They examine these reports to ensure they accurately represent the organization’s financial position, performance, and cash
flows
• In addition to verifying the accuracy of the financial reports, audit committees also assess their completeness
• They ensure all necessary disclosures, like information about transactions, contingencies, related party transactions, and
significant accounting policies, are appropriately presented
ii. Internal Control and Risk Management
• Audit committees ensure adequate controls are in place to safeguard assets, manage risks, and prevent fraud
• To fulfill this responsibility, the committees review internal control reports and risk assessments and discuss findings with
management and internal auditors
• By reviewing internal control reports, audit committees assess their design and operating effectiveness to mitigate various
risks
• They examine whether the control environment is strong, including factors such as the tone at the top, ethical values, and
integrity

iii. Compliance and Regulatory Matters
• Audit committees ensure the organization operates within the legal and ethical framework, adhering to applicable
regulations and industry guidelines
• The committee members review compliance programs to assess their effectiveness and identify any gaps or areas of
improvement
• Audit committees also stay abreast of regulatory changes and assess their impact on the organization
• They monitor developments in laws and regulations relevant to the company’s industry and operations
• The audit committee works closely with the corporate governance committee to resolve and investigate compliance
matters
iv. Whistleblower and Ethics Programs
• Audit committees establish mechanisms to enable employees and stakeholders to report concerns regarding accounting
practices, fraud, or ethical violations
• The audit committee oversees the effectiveness of these programs and ensures they provide a safe and confidential
environment for reporting
• As part of their oversight, audit committees review reports of alleged misconduct or violations received through the
whistleblower and ethics programmes
• They assess the nature and significance of these issues and determine the appropriate course of action, which may involve
initiating investigations or engaging external resources, such as forensic auditors or legal counsel

Internal and External Auditors
Internal Audit
 Internal audit is an independent function within the organization or the company, which comprises a team of professionals
who perform the audit of the internal controls and processes of the company or the organization
 Senior management and the board determine the role the internal audit activity will play in the organizational risk
management process
 In most organizations, internal auditors have a key role in evaluating the effectiveness of enterprise risk management and
recommending improvements
Components of Internal Audit
i. Internal audit staff are employees, but they are not part of the management of the organization or the company. It
means that they do not perform business activities or take part in performing the operations of the company.
ii. The internal audit department works as an independent department and reports to the board of directors
committee and the board audit committee (BAC).
iii. The internal audit department performs an audit of the processes and controls of the departments and functions
of the organization or the company.
iv. Internal audit observations are identified and reported by the internal auditors in the internal audit reports.
v. Significant audit observations are reported by the head of internal audit or the chief internal auditor (CIA) to the
board audit committee (BAC) periodically.
vi. Internal auditing is a continuous process that is based on the internal control systems of any size business.

Internal and External Auditors
External Audit
 External auditors are the independent third party or a body of professionals who perform the statutory audit of the financial
statements of the organizations or the companies
 The external audit is the necessary activity that is performed by external auditors to provide an independent opinion on the
financial performance and financial position of the company
Components of External Audit
i. External auditors are not related to or part of the management of the company being audited.
ii. They are required to maintain independence. Independence means the performance of audit activities and
procedures without any influence by the board of directors or the management of the company.
iii. External auditors are qualified professionals in the field of finance and audit.
iv. Their audit activities and audit reports are considered very reliable by the shareholders and other
stakeholders of the company.
v. The scope of external audit is limited to the financial statements of the organization or the company which is under
audit.
vi. External audit in most cases is the statutory requirement shared with relevant stakeholders of the company.
vii. External auditors are required to apply the audit procedures on the financial information and transactions of the
company that occurred during the past period.
viii. External auditors are required to obtain sufficient appropriate audit evidence to support the audit opinion on the
financial statements of the organization or company

Roles of Internal and External Auditors
i. Internal auditors will investigate issues concerning the company’s business practices and risks,
while external auditors will examine the financial records and issue an opinion on the
company’s financial statements
ii. Internal audits are performed throughout the year, while external auditors perform a single
annual audit.
iii. Internal auditors work within a company and report to the audit committee or the board of
directors while external auditors are not affiliated with the organization they are auditing and are
accountable to the company’s shareholders.
iv. Internal auditors contribute to the design of the company’s organizational systems as well as the
development of specific risk management policies while external auditors work on a test basis to
monitor the systems in place.
v. Internal auditors ensure that all risk management policies are in place and working properly
while external auditors offer their expert opinion of truth and fairness on the accuracy of the company’s
financial statements.

Roles of Audit Committee in enhancing good Corporate Governance
i. Roles of Audit Committee in Internal Control
 Internal control is defined by Committee of Sponsoring Organisations (COSO) 1992 as “process affected by
entity’s board of directors, management, and other personnel, designed to provide reasonable assurance
regarding the achievement of objectives in the following categories:
 a) effectiveness and efficiency of operations
 b) reliability of financial reporting
 c) compliance with laws and regulations
 Internal control structure includes policies, procedures, and practices followed by the organization to control its
operations, particularly its financial part, and to ensure the organization’s compliance with the valid and relevant
laws and regulations, as well as the organization’s own bylaws and resolutions
 Even though it is well-known that the internal control structure cannot prevent or detect all errors and
irregularities, organizations establish and maintain such structure for the purpose of providing reasonable, not
absolute, assurance regarding the integrity of management, as well as the accuracy and reliability of financial
reporting
 The audit committee receives reports about the internal control’s effectiveness and efficiency from the
organization’s management, internal and external auditors

ii. Relationship between Audit committee and Internal Auditors
 The relationship between the audit committee and internal auditors, and the consequent effects, are supported
by many research findings
 A study earlier conducted show that independence and accounting experience have a complementary effect on
the relationship between audit committee and internal audit
 Zain et al. also found that more effective audit committees and well-resourced internal audit units tend to be
positively associated with the assessment of the internal auditors’ contribution to the external audit
 In addition, Asare found that internal auditors in both a self-assessment role and a due diligence role are
sensitive to variations in audit committee quality

iii. Roles of Audit Committee in External Audit
 The external audit tasks are directly related to the audit committee activities
 The scope of the external audit function is determined by the audit committee
 The audit committee plays a major role in selecting the external auditors since it nominates them, asks them to submit
their proposals regarding the audit process, then it recommends to the organization’s board of directors whom it sees
are the best to perform the external audit
 In a public-interest entity, the proposal of the administrative or supervisory body for the appointment of a statutory
auditor or audit firm shall be based on a recommendation made by the audit committee
 The statutory auditor or audit firm shall report to the audit committee on key matters arising from the statutory audit,
and on material weaknesses in internal control in relation to the financial reporting process as:
 i. The audit committee assists in selecting the external auditor to audit and/or review the accounts and issue
his/her opinion about the correctness and accuracy of the reports.
 ii. Changing the external auditor also requires direct interference by the audit committee.
 iii. To protect and preserve the shareholders’ interests, the audit committee oversees the nature and scope of
work of the external auditors, evaluates their effectiveness, and recommends the proper audit fees that should
be paid to them.
 iv. The audit committee assists in ensuring that the external auditors are independent, and that there is no
conflict of interest which may weaken the external auditors’ ability of issuing their opinion.
 v. The external auditors submit their reports to the audit committee where both parties discuss
important issues, such as management’s errors, irregularities, and fraud.

iv. Role of Audit Committee in Accounting and Financial Reporting
 One of the main responsibilities of the audit committee is to oversee the financial reporting process to enhance
the quality of this process
 The audit committee is responsible for monitoring the organization’s accounting policies, principles, and practice
 It reviews the organization’s financial statements monthly, quarterly, and/or annually according to the
organization’s size, system, and nature of business
 The audit committee members often discuss with management the accounting standards and principles, as well
as accounting estimates and judgments made by management
 The audit committee interacts regularly with the organization’s chief financial officer, controller, and finance
manager, and report on the capabilities and competence of these managers
 The audit committee may direct a special investigation when significant problems with accounting practices or
personnel is identified or alleged
 The external auditors are required to report to the committee on their views on management's selection of
accounting principles, accounting adjustments made by management or external auditors, any disagreement or
difficulties encountered in working with management, and any identified fraud, irregularities, or illegal acts
 Audit committee is a very important link between the organization’s financial reporting function and its external
constituents; consequently, when this link is compromised, it may lead to large corporate governance problems

v. Role in Role in Regulatory Compliance
 The audit committee is responsible for overseeing the organization’s disclosure process, ensuring that the
organization complies with the relevant local and international laws, implementing regulations and ethical
standards and principles, and complying with the organization’s bylaws and internal guidelines
 The audit committee discusses with the organization’s management, attorney, and general counsel any litigation
or regulatory compliance risks
 Large corporations may also have a chief compliance officer or ethics officer with whom the audit committee
may discuss reported incidents or risks related to the entity's code of conduct

vi. Role in Risk Management
 The audit committee discusses with the organization’s management the policies and practices used to identify,
prioritize, and respond to the risks that threaten the achievement of the organization's objectives or
opportunities that enhance the achievement of such objectives
 Many organizations develop their practices towards a risk-based management approach, called Enterprise Risk
Management (ERM)
 In this regard, Contesrotto and Moroney (2014) found that there is a negative correlation between audit
committee effectiveness and audit risk since the audit committee plays a major role in improving financial
statement integrity
 The audit committee is also involved in non-financial risk assessment

vii. Role of Audit Committee in Accounting and Financial Reporting
 One of the main responsibilities of the audit committee is to oversee the financial reporting process to enhance the quality of
this process
 The audit committee is responsible for monitoring the organization’s accounting policies, principles, and practice
 It reviews the organization’s financial statements monthly, quarterly, and/or annually according to the organization’s size,
system, and nature of business
 The audit committee members often discuss with management the accounting standards and principles, as well as accounting
estimates and judgments made by management
 The audit committee interacts regularly with the organization’s chief financial officer, controller, and finance manager, and
report on the capabilities and competence of these managers
 The audit committee may direct a special investigation when significant problems with accounting practices or personnel is
identified or alleged
 The external auditors are required to report to the committee on their views on management's selection of accounting
principles, accounting adjustments made by management or external auditors, any disagreement or difficulties encountered
in working with management, and any identified fraud, irregularities, or illegal acts
 According to Bolton (2014), the audit committee is a very important link between the organization’s financial reporting
function and its external constituents; consequently, when this link is compromised, it may lead to large corporate governance
problems

viii. Role in Role in Regulatory Compliance
 The audit committee is responsible for overseeing the organization’s disclosure process, ensuring that the
organization complies with the relevant local and international laws, implementing regulations and ethical
standards and principles, and complying with the organization’s bylaws and internal guidelines
 The audit committee discusses with the organization’s management, attorney, and general counsel any litigation
or regulatory compliance risks
 Large corporations may also have a chief compliance officer or ethics officer with whom the audit committee
may discuss reported incidents or risks related to the entity's code of conduct

ix. Role in Risk Management
 The audit committee discusses with the organization’s management the policies and practices used to identify,
prioritize, and respond to the risks that threaten the achievement of the organization's objectives or
opportunities that enhance the achievement of such objectives
 Many organizations develop their practices towards a risk-based management approach, called Enterprise Risk
Management (ERM)
 In this regard, Contesrotto and Moroney (2014) found that there is a negative correlation between audit
committee effectiveness and audit risk since the audit committee plays a major role in improving financial
statement integrity
 The audit committee is also involved in non-financial risk assessment.

Ways to Enhance the Board and Audit Committee Role
Regular Board Evaluations
•Conduct periodic evaluations of the board's performance and effectiveness
•This assessment can identify areas of improvement and help develop plans for enhancing the board's capabilities
Independence
•Having many independent directors on the board can foster objective decision-making
•Independent directors are not associated with the company's management or significant stakeholders, which reduces potential conflicts
of interest
Diverse Skillsets and Experience
•Ensure the committee comprises individuals with diverse backgrounds, expertise, and experiences relevant to the company's industry
and challenges
•A mix of skills in finance, technology, marketing, legal, and operations can provide valuable insights and perspectives
Continual Education
•Encourage board members to engage in ongoing education and training to stay informed about industry trends, regulatory changes, and
best practices
•This will enable them to make better-informed decisions
Risk Management
•The board should prioritize risk management and establish processes to identify, assess, and mitigate risks faced by the organization
•The Audit Committee plays a crucial role in overseeing the company's internal controls and risk management processes

Ways to Enhance the Board and Audit Committee Role
Ethics and Compliance
• Promote a strong culture of ethics and compliance within the company
• The board should lead by example and establish appropriate policies to ensure adherence to legal and ethical standards
Engaging External Advisors
• Seek advice from external consultants or experts when needed
• They can provide valuable insights and help address complex issues
Performance-based Compensation
• Tie board and committee members' compensation to performance metrics and align it with the organization's long-term objectives
• This incentivizes them to work towards achieving the company's goals
Stakeholder Engagement
• The board should actively engage with stakeholders, including shareholders, employees, customers, and the community
• Understanding their perspectives can guide strategic decision-making
Communication and Transparency
• Ensure that the board communicates effectively with shareholders and stakeholders
• Transparency in decision-making processes builds trust and confidence in the organization
• By implementing these strategies, companies can enhance the effectiveness of their Board of Directors and Audit Committee, leading to better
governance and increased likelihood of achieving organizational objectives

Conclusion
The importance of the audit committee’s powers, functions and responsibilities to the organizations’
board of directors, shareholders, and other stakeholders, as well as to governing and regulatory bodies,
have been increasing to achieving a good corporate governance
It provides oversight of the financial reporting process, ensures compliance with regulatory
requirements, mitigates risks, promotes transparency and accountability, and provides
valuable insights to the board of directors and management team
Having the board of directors and the audit committee in place helps an organization to
achieve its strategic goals and improve its financial and audit performance
The relationship between the audit committee and other relevant parties is important for all
parties to fulfill their job commitments
An organization’s board of directors relies on the audit committee’s reports about matters
related to managing, directing and controlling the organization

Recommendation
There should be a clear and written
statements showing the audit
committee’s activities, responsibilities,
objectives for self-evaluation to identify
improvement opportunities
Setting strategic goals and monitoring
progress towards achieving them
Ensuring committees meet regularly,
well-informed, and operate with
transparency
Encourage open communication and
ensure that each director's input is
valued and considered
Board members should actively
participate in meetings, committees, and
discussions

Prof. Godwin Emmanuel
Oyedokun
godwinoye@yahoo.com;
godwinoye@oyedokungodwin.com
+2348033737184, & +2348055863944

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