ACCTG312 Auditing Theory and Practice

You work for a mid-sized audit firm, Green & Co. One of your clients, WedfordLtd, recently established an audit committee in compliance with the Australian Securities Exchange listing requirements. The committee is made up of Francis Carton, Jo Pashtoonand Charles Digson.Francis is an executive of the company and has worked his way up from a factory worker through to management. Francis is the chairperson of the audit committee.Jo is not a member of management and is therefore a non-executive director, but she does serve on a number ofother boards. Jo’s background is in accounting and before she became a directorshe was the CFO of a large corporation for many years.Charles is the chairperson of the board of directors and is an executive of the company. Charles’ background is in manufacturing and he has been with WedfordLtd for 5 years.The committee has drafted a charter which details its rights and responsibilities. This will include the committee’s interactions with the newly formed internal audit department. The Board would like to discuss with you the relationship between your firm as external auditors, the internal audit team and the audit committee.RequiredPrepare a report for the Board, covering the following matters:a)Outline the objectives of an audit committee.b)Discuss the interaction between the audit committee and both the internal and external audit functions.c)Identify the strengths and weaknesses of WedfordLtd’saudit committee.d)Recommend terms of reference for the committee