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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Business Law
Satisfied Customers: 118651
Experience:  All corporate law, including non-profits and charitable fraternal organizations.
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A new question for PaulMJD only. Please explain why an audit

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A new question for PaulMJD only. Please explain why an audit committee of a corporation should hold a Board accountable for their use of finances of the corporation and not provide oversight of a CPA's audit of the corporation?
Thank you for your new question. I look forward to working with you to provide you the information you are seeking.

The Board of Directors is accountable for the operation of the organization ultimately. This means they are liable for all actions and operations of the corporation. The audit committee is formed by the board to oversee finances and expenditures and they report to the board who is accountable for the entire financial situation of the organization. Generally, the audit committee submits their audit to a CPA for an independent accounting review of the organization's financial records. Some organizations do not have a audit committee, they simply send their finances from the board directly to an independent CPA for an annual audit of the finances and whatever that audit shows the Board of Directors is responsible for.



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Customer: replied 4 years ago.
So are you saying the Audit Committee she do its work before the Corporation's CPA's does its work?
The audit committee should be working together with the internal CPA or CFO and they should be getting their information from the CPA or CFO. The audit committee reviews the financial data from the CPA and works with them on the audit and then it is sent out to the independent CPA for review. So it is a checks and balances system.
Customer: replied 4 years ago.

I'm sorry Paul at being late getting back to you, I have been on the road etc.


 


If the cooperative housing corporation does not have an internal CPA or a CFO (Chief Financial Officer ?) but just has a treasurer and a management company managing the corporation, and an independent CPA who is paid to provide an annual audit, how should the Audit Committeeit consisting of volunteer shareholders in the corporation operate?

The treasurer would be the one providing information to the audit committee for review. Then the audit committee would review the information and perform their audit. The information from the secretary is also sent to the independent CPA for his annual audit. The audit committee is more the check and balance over the treasurer and board, the independent CPA takes the information from the treasurer, which should be identical to what the audit committee has and performs a proper accounting.
Law Educator, Esq. and 2 other Business Law Specialists are ready to help you
Customer: replied 4 years ago.

PaulMJD


That was SOME SUMMARY - A GEM OF ONE. What you have provided me will be of immediate use to me and might influence a whole course of actions inwhich I am involved...or so I hope for the betterment of a lot of corporation shareholders.

Thank you very much. 10 years dealing with corporate boards and non-profit boards I have seen all of this work right and work not so right.