1. Administration.
Investors and creditors (in the absence of the owner of a public company) entrust the daily operation and activities of the company to the senior management. When considering the company's activities and policies, the management has the responsibility to act in the best interests of the absent owner.
2. Board of Directors.
Members of the board of directors are directly appointed by shareholders to ensure that the management's actions are in the best interests of absent shareholders. The board of directors is an important adviser to the management.
However, apart from the appointment and removal of senior managers, they do not participate in the actual daily operation of the company, but use their professional knowledge to help the management in the process of determining the company's operation, finance and marketing strategy. The Board also advises management on communication and financial reporting. If the operation is effective, the board of directors can provide clear and objective guidance and supervise the performance and behavior of management.
3. Audit Committee.
The Audit Committee is a sub-committee of the Board of Directors. The purpose of the Audit Committee established by the Board of Directors is to supervise the accounting and financial reporting process, as well as internal and external auditors.
Expand:
1. Internal auditor.
Internal auditors provide quality control for the company's financial system. In listed companies, internal auditors are responsible for ensuring the existence and effective operation of internal control. They play an important role in monitoring and managing company operations, information systems, financial reporting and fraud-related risks.
In addition, the internal audit function can confirm that the governance structure and processes operate effectively within the scope of the company's guidelines and external regulations. Investigating fraud and other illegal acts is another function exercised by internal auditors.
If properly implemented, the internal audit function can be used as the main tool for the board of directors, audit committee and management to ensure that the company's financial information can be properly collected and reported. It is best for internal auditors to report directly to the audit Committee.
2. External auditors.
Although the internal audit department helps to ensure compliance with existing standards and regulations, regulators require that the financial statements of all listed companies be audited by independent external audit companies.
According to the objectivity and ability of the internal audit department, the external auditor can appropriately rely on the work of the internal audit department. The independence and objectivity of external auditors help them to assure investors that management has properly prepared and compiled financial statements according to current standards. The external auditor is appointed by the Audit Committee and reports directly to it.