Firstly, I will have to understand the nature of the organization.

• Make sure I obtain copies of the following;
   The law establishing the organization
   Internal Audit Agency Act, 2003 (Act 658)
   Public Financial Management Act, 2016 (Act 921)
   Internal Audit charter of the organization
   Risk Assessment Profile of the organization
   Strategic Plan of the Organization
   Organization Chart
   Corporate Profile
   Write-up on all the Heads of Department
   Previous Internal audit reports
   Previous External audit reports
• Second, plan how the work will be done by holding a meeting with the members and the internal auditor to discuss and review the following:
   Internal audit charter
   The risk of the organization
   Internal Audit Plan and Budget for the year
• Hold meetings to discuss internal audit and external audit reports. Ensuing that internal audit work is done in line with plan and ensure that recommendations by internal and external auditors are discussed with management and implemented.
• Ensuring that internal audit department is adequately resourced, with personnel and equipment, to perform creditably.
• Supervise meetings in a coordinated manner to ensure that members participate effectively to the benefit of the organization.
• Ensure that internal audit personnel are given periodic and adequate training.
• Ensure the independence of internal audit personnel in the performance of its work.
• Ensure implementation of any recommendation contained in
   Internal audit report
   Parliament’s decision on the Auditor-General’s report
   Auditor-General’s Management Letter
   The report of an internal monitoring unit in the organization particularly in relation to financial matters.
• Ensure reports are made annually on implementation of recommendations to the Minister, Parliament, and Office of the president and the Auditor-General within six months after the end of each financial year.
• Review the activities of the year to ensure that the organizations risks are adequately attended to.
  And any other relevant point.

Mandatory roles and responsibilities of Audit Committees
The audit committee shall ensure that the head of the covered entity.

• Pursues the implementation of recommendation contained in.
  a. Internal Audit reports
  b. Parliament decisions on the Auditor-Generals report
  c. Auditor-General management letter
  d. The report on internal monitoring unit in the covered entity particularly in relation to financial matters raised; and
  e. Any other report the principal account holder shall require.
• Prepares an annual statement showing the status of implementation of recommendations contained in:
  a. Internal audit reports
  b. Parliament’s decision on the auditor – General’s report.
  c. Auditor- General’s management letter
  d. The report of internal monitoring unit the covered entity concerned particularly in relation to financial matters raised
  e. Any other report the minister shall require
• An annual statement required under the above shall;
  a. Indicate the remedial action taken or proposed to be taken to avoid or minimise the recurrence of an undesirable feature in the accounts and operations of a covered entity.
  b. Indicate the period for the completion of the remedial action: and
  c. Be endorsed by the relevant sector minister and forwarded to the minister of finance, parliament and the office of the president and the Auditor-General within six months after the end of each financial year.

Advisory Roles and Responsibilities.

• Providing advice on sound, transparent and reliable financial management;
• Ensuring the risk management process is comprehensive and effective;
• Helping achieve organizational-wide strong and effective internal controls in the covered entity
• Reviewing corporate policies relating to compliance with laws, regulations, ethnics, conflict of interest, investigation of misconduct and fraud.
• Reviewing current and pending corporate governance-related litigation or regulatory proceedings to which the covered entity is a party.
• Ensuring the internal auditor access to the audit committee and encouraging communications beyond scheduled committee meetings.
• Reviewing internal audit plans, internal audit charters, risk (including fiscal risk) assessment reports.
• Ensuring the development, approval and update of the code of conduct. The committee should also ensure that all employees receive the code of conduct understand it and obtain appropriate training regarding it.
• Follow up on significant issues investigations and disciplinary actions.
• Collaboration with the internal audit agency to initiate investigation into matters involving fraud or misuse of public funds by the principal spending officer.
• Reviewing audit reports for assurance on efficiency, effectiveness and economy in the administration of programmes and operations of the covered entity.

An AC is mandated to:

• Ensure the implementation of the recommendations in all audit reports of every MDA and MMDA.
• Follow-up Auditor-General and Public Accounts Committee’s recommendations as well as recommendations in internal audit reports.
• An AC must ensure that the head of the MDA/MMDA:
• Pursues the review and implementation of matters in all audit reports as well as financial matters raised in the reports of internal Monitoring Units in the institution, body or organisation
• Annually prepares a statement showing the status of implementation of recommendations made in all audit reports as well as the Auditor-General’s reports which have been accepted by parliament and any other related directives of Parliament:
  The statement shows remedial actions taken or proposed to be taken to avoid or minimize the recurrence of undesirable features in the accounts and operations of the institution, body or organisation, and the time frame for action to be completed.
  The statement referred to above shall be endorsed by the relevant Minister and forwarded to Parliament, Office of the president, the Director-General of Internal Audit Agency (IAA) and the Auditor-general within six months after Parliamentary decisions on the Auditors General’s reports.
• In relation to internal audit, the AC shall: Review and advise on the strategic and annual internal audit plans; Monitor the performance of internal Audit Units against its annual internal audit plans and strategic plans; Monitor the implementation agreed audit recommendations.

An Audit committee is a sub-committee of the board of Directors which is mandated to help the main board to discharge its responsibilities in the area of achieving effective and transparent financial reporting. To play an independent role the audit committee should be composed of at least three and maximum of five members, majority of whom should be non-executive directors. Whiles the members are not required to be accounting and financial professionals they should have sufficient knowledge and experience in financial matters, especially financial reporting requirements.

While these executives of the company cannot be members of the committee, they can be in attendance at meetings.
1) The Chief executive officer
2) The financial director or chief financial or accounting officer
3) Head of internal audit

The external auditor may also be invited when necessary to attend a meeting of the committee.

Responsibility of an audit committee
The main role and responsibilities of the audit committee are as follows:

1) To monitor the integrity of the financial statements of the company and any formal announcement relating to the company’s performance, reviewing significant financial reporting judgements contained in them.

2) To review the company’s internal financial controls and, unless expressed addressed by a separate board risk committee composed of independent directors or by the board itself, to review the company’s internal control and risk management systems.

3) To monitor and review the effectiveness of the company’s internal audit function.

4) To make recommendations to the board, for it to put to shareholders for their approval in general meeting , in relation to the appointment, re-appointment, and removal of the external auditor and to approve the remuneration and terms of engagement of the external auditor.

5) To review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process taking into account relevant professional and regulatory requirements.

6) To develop and implement policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external firm and to report to the board identifying any matters in respect of which it considers that action and improvement is needed and making recommendations as to steps to be taken.

7) To report to the board how it has discharge it responsibilities, including

• How it has addressed significant issues arising in the financial statements
• How it has addressed the effectiveness of the audit process
• How auditors objectivity and independence is safeguarded, where the auditor provided non-audit services.                                (Any 5 points for 5 marks)