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In preparation for listing on the UK stock market a company has started to set up the various committees needed to comply with the UK Corporate Governance Code.
Ithasidentified the need for an Audit Committee and haslisted thecharacteristics below but are not sure if they are all correct.
Which of the options below is NOT a characteristic of the Audit Committee?
Suggested Answer: C
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36 comments · newest first
EL
Elli
11 months ago
I’m surprised that’s even a question! Isn’t that a basic function?
AR
Ardella
11 months ago
Wait, can they really set the external audit fee? That seems off.
KE
Keneth
11 months ago
Yeah, they definitely recommend the appointment of external auditors.
DO
Doretha
12 months ago
I thought they needed a majority of non-executive directors too.
GL
Glenna
12 months ago
Audit Committees usually have non-executive directors.
PU
Pura
1 year ago
I thought the Audit Committee was supposed to have a majority of non-executive directors, but now I'm questioning if that's a strict requirement or just a best practice.
KA
Kaitlyn
1 year ago
I feel like all the options listed are typical roles of an Audit Committee, but I have a nagging doubt about whether they actually set the external audit fee.
DO
Dorothy
1 year ago
I remember studying that the committee should mainly consist of non-executive directors, but I can't recall if they need a majority.
PA
Page
1 year ago
I think the Audit Committee definitely has to recommend the appointment of external auditors, but I'm not sure about the fee-setting part.
TR
Trinidad
1 year ago
I've got a good strategy for this. I'll first identify the key responsibilities of the Audit Committee, then evaluate each option against that to determine which one doesn't fit.
CH
Chu
1 year ago
I'm a bit confused by this question. The characteristics listed seem to be all correct, so I'm not sure which one is not a characteristic. I'll need to re-read the options carefully.
GW
Gwenn
1 year ago
Hmm, I'm a bit unsure about this one. The options seem quite similar, so I'll need to carefully read through each one to determine which is not a characteristic.
CA
Carolynn
1 year ago
This seems like a straightforward question on the characteristics of an Audit Committee. I'm confident I can identify the one that is not a characteristic.
TE
Terry
1 year ago
Okay, let me think this through step-by-step. The Audit Committee is responsible for overseeing the financial reporting and audit process, so I'll need to evaluate each option against that role.
JE
Jennie
2 years ago
The audit committee needs to be made up of a majority of non-executive directors to ensure their independence. That's a key principle of good corporate governance.
RI
Richelle
2 years ago
D) Recommends appointment and removal of external auditors
LO
Loren
2 years ago
C) Comprises of a majority of non-executive directors
HA
Hayley
2 years ago
B) Comprises of non-executive directors
AL
Alita
2 years ago
A) Sets the external audit fee
TI
Timothy
2 years ago
Haha, I bet the company's finance team wishes they could set the audit fee. 'Sorry, we're a little short this quarter. How about half-price?'
JE
Jeannine
2 years ago
I'm surprised that option A is even on the list. Isn't that a basic no-no for corporate governance?
MO
Mollie
2 years ago
C) Comprises of a majority of non-executive directors
PA
Paris
2 years ago
B) Comprises of non-executive directors
RO
Rodolfo
2 years ago
A) Sets the external audit fee
KI
Kiley
2 years ago
Yup, I agree. The audit committee should be independent of the company's management, so they can provide objective oversight.
YU
Yuriko
2 years ago
C) Comprises of a majority of non-executive directors
WI
Wilda
2 years ago
B) Comprises of non-executive directors
JO
Jodi
2 years ago
A) Sets the external audit fee
DI
Dianne
2 years ago
I also think option A is the correct answer. The Audit Committee recommends the appointment and removal of external auditors.
AL
Alva
2 years ago
I agree with Sophia. The Audit Committee does not set the external audit fee.
SO
Sophia
2 years ago
I think option A is NOT a characteristic of the Audit Committee.
LA
Laurel
2 years ago
The audit committee should not be setting the external audit fee. That's a clear conflict of interest!
AD
Adell
2 years ago
D) Recommends appointment and removal of external auditors
OM
Omer
2 years ago
C) Comprises of a majority of non-executive directors
TE
Tennie
2 years ago
B) Comprises of non-executive directors
GR
Graciela
2 years ago
A) Sets the external audit fee