Auditing and Corporate Governance: ASX Principles and Recommendations

This report delves into the critical intersection of auditing and corporate governance, specifically examining the ASX Corporate Governance Council's Principles and Recommendations (4th Edition, February 2019). The analysis explores how the adoption of each of the eight ASX principles influences the auditor's risk assessment process, audit approach, strategy, and the evidence gathered during an audit. The report highlights the importance of a strong corporate governance framework in ensuring the integrity of financial reporting, maintaining stakeholder trust, and promoting ethical business practices. It covers the auditor's role in verifying the true and fair value in financial statements and the significance of internal control systems. The principles discussed include laying solid foundations for management, structuring the board effectively, instilling a culture of ethical behavior, safeguarding corporate reports' integrity, making timely disclosures, respecting security holders' rights, managing risk, and ensuring fair remuneration. The report emphasizes the interconnectedness of these principles and their collective impact on the overall effectiveness of auditing and corporate governance within an organization.

AUDITING

INTRODUCTION
• It is the inspection and examination of company books of account
• It helps the auditor to check the true and fair value in the business
• Auditor has to analysis the company internal control system
• It check whether the company is following proper rules and regulation
in the preparation of company financial statement

CORPORATE GOVERNANCE
• Corporate Governance is the collection of processes and mechanisms
by which the company are operated and controlled
• It signifies the distribution of responsibilities and rights among different
members in the business
• Corporate Governance helps the company to maintain a proper
relationship between stakeholder and upper management of the
company
• It includes the objective of the company and how the company pursued
the same in the regulatory, social and market environment

PRINCIPLE OF CORPORATE GOVERNANCE
• Lay Solid Foundations for Management and Oversight
• Structure the board to be effective and add value
• Instil a culture of acting lawfully, ethically and responsibly
• Safeguard the integrity of corporate reports
• Make timely and balanced disclosure
• Respect the rights of security holders
• Recognise and Manage Risk
• Remunerate fairly and responsibly

PRINCIPLE 1
• A listed entity should state all the respective roles and responsibilities
of its board members and should continue review their performance in
the business

PRINCIPLE 2
• Company should have proper composition of board of directors and
they should also posses the required skills in the business. Members of
board should have proper knowledge about the company business
operation and should perform their duty properly in the business.

PRINCIPLE 3
• Company has to make proper rules and regulation which helps them to
carry their business activities lawfully, responsibly and ethically.

PRINCIPLE 4
• Company should make a proper process which help it to verify the
financial report of its business activities.

PRINCIPLE 5
• Company should provide detail information in their disclosure related to
company activities as this will help the financial user to know the
financial health of the company.

PRINCIPLE 6
• Company has to provide detail information and the right of the security
holders which help them to build a proper relationship with the
company.

PRINCIPLE 7
• Risk has to be minimized so the company has to establish a proper risk
management system which help them to control the risk in the
business. It should also verify all the transaction which are taking place
in the business.

PRINCIPLE 8
• Entity has to pay proper amount of remuneration to its director which
helps them to attract high quality director and should design the
remuneration of the executive which help the company to attract high
quality of senior executive.