What is audit committee and it's role in an organization?

Listed entities should have an audit committee of at least 3 non-executive directors and the
committee should have written terms of reference which deal clearly with its authority and
duties.
๏ The duties of the audit committee should include reviewing the scope and results of the
audit, its cost effectiveness and the independence and objectivity of the auditors. The
committee is also responsible for overseeing on behalf of the board, and reporting to the
board on:
‣ the financial reporting process and the audit thereof
‣ the internal control of the business and the review thereof, usually by internal audit.
๏ The external auditors should be open and honest in their communication with the audit
committee. They should ensure that all relevant and significant issues are brought to the
committee’s attention and openly discussed.
๏ Prior to the audit, matters such as the scope of the audit, role of internal auditors, audit fees
and other services provided should be discussed with the audit committee.
๏ On completion of the audit, the auditors’ discussion with the audit committee should cover:
‣ all matters on which they are required by regulation or standards to report
‣ the control environment
‣ any differences of opinion between the auditors and the management and how these
have been resolved
‣ significant adjustments made to the financial statements and any unadjusted amounts
‣ observations on other information to be published with the financial statements.