Responsibility of an Auditor in Auditing the Financial Statement

Running head: RESPONSIBILITY OF AN AUDITOR IN AUDITING THE FINANCIAL
STATEMENT
Responsibility of an Auditor in Auditing the Financial Statement
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1Responsibility of an Auditor in Auditing the Financial Statement
Table of Contents
Answer to Q1.............................................................................................................................2
Answer to Question 2.................................................................................................................4
Answer to question 3..................................................................................................................5

2Responsibility of an Auditor in Auditing the Financial Statement
Answer to Q1.
Corporate governance refers to the set of rules, process and system within which a
corporation need to function (Tricker, 2015). Good corporate governance means increases the
promoter confidence in the business, and thus increases the company chances to raise more
funds from the public to do more business. The adoption of the corporate governance vary
from the enterprise to enterprise depending upon the size, complexity, nature of the business.
The corporate governance of the ASX revolve around the eight central principles, out
of which principle 8: remunerate fairly and responsibly has been discussed below as per the
question.
As per this principles a listed company in order to attract and retain quality director,
must have to provide them sufficient remuneration as a motivation factor to align their
interest in the company goals and objective (Claessens, & Yurtoglu, 2013).
The board of a listed company should have a remuneration committee which should have
a) Has at least three member a majority of them should be an independent director,
b) The remuneration committee should be chaired by an independent director,
c) Disclosure of the committee charter or guidelines,
d) Disclosure of the committee member names,
e) Disclosure of the number of times the committee meeting was held and the name of
the member who have attended the meeting.
It is a mandatory requirement for the listed entity to have a systematic and transparent
process for the designing the remuneration policy and setting the salary of the director
and Non- executive members (McCahery, Sautner & Starks, 2016).

3Responsibility of an Auditor in Auditing the Financial Statement
This is to be noted that the board of the director should not be biased in
bringing the matter before the board, in lieu of the remuneration or incentive. The
non-executive director should be independent in taking any business decision.
The relation between the director remuneration and their performance should be
clearly enunciated to the investor.
If a company is not having any remuneration committee then.it must disclose
the matter in the footnotes of the financial statement, also the company should make a
justification about the calculation of the existing remuneration structure.
In case if a remuneration committee include executive directors, then the salary of
those executive directors should not be decided by them (Khan, Muttakin & Siddiqui
2013).
In case of FFA corporate governance, the company is violating the norms of
the ASX corporate governance. The violation by the company is listed below-
As per the rule the independent directors of the company should not hold more than
the 5 % share of the company. Those executive director should be free from the any
business relationship that materially affects their independence judgment.
In the business of the FFA the Kevin Oliver the Non-Executive directors are
holding a share value of 11 % which is against the law and regulation of the company
and the same person is holding the position of the executive at the Macquarie bank.
On the other hand Jacqueline grace the non-executive director is in the business
relationship apart from the FFA business which is the breach in law of the corporate
governance. The FFA is also not having any remuneration committee to decide the
remuneration of the directors this matters should be disclosed appropriately.