Independent Auditor

Independent Auditor

In response to the growing concern of high profile corporate collapses globally, many countries including Australia have introduced a number of regulatory changes CLERP 9 (2002), which they believe would help improve corporate governance and examine the causes of this collapses. Within the introduction of these rules it has created number issues in regards to the role and responsibility of directors, as well as the major changes in the audit committee requiring independent directors to be included as a member of its audit committee, its effectiveness and factors will be later tackled by this report. This report aims to account the effectiveness of independent directors in an organisation, as well as discussed the advantages and disadvantages of new legislations and standards relating to independent directors being part of company’s audit committees.

Corporate governance has been receiving a lot of attention recently eversince the numerous collapses of big profiled companies such as Enron, Worldcom, Parmalat, One.Tel, HIH and Harris Scarfe. The corporate world has been questioned a few times about its board’s integrity and management practices. Biserka Siladi, 2006 stated “the role and responsibility of the board and directors has emerged as an important issue in examining the cause of these collapses. This has created much debate on what the role of the directors in ‘directing’, ‘monitoring’ or ‘advising’ a company.” Issues such as effective corporate governance and involvement of independent directors have emerged as the most controversial concerns of a company. The ASX Corporate Governance Council (2003) defines corporate governance as ‘the system by which companies are directed and managed. It influences how the objectives of the company are set and achieved, how risk is monitored and assessed, and how performance is optimized.” One way to enhance good corporate governance is to follow the ASX Corporate Governance Council’s principles which are based...

Similar Essays