Audit committees must now work even harder

IT is understandable if audit committee members feel they are the most hardworking of the board committees. This position is partly reflected in their compensation: audit committee chairmen and members usually receive higher director fees than their peers.

The audit committee is the only board committee that is mandated by law. It is often viewed as "the last line of defence for a company to prevent and manage risks" (SID Statement of Good Practices No 4). Its role is to ensure that the company's internal controls are adequate and effective, and to scrutinise the accounts so as to recommend the adoption of the company financial statements to the board and the shareholders.

The job of the audit committee is made more difficult with the ever changing accounting standards. At present, all listed companies in Singapore must comply with the Singapore Financial Reporting Standards (SFRS), which closely track the International Financial Reporting Standards (IFRS) issued by the International Account…