Corporate governance cannot without doubt exist in any organization without the audit committee best practices. The combat for financial affirmation reliability and candor has always depended on balancing the stress of various shareholders. This includes the management, investors, the public interest and the regulators.
Every organization should have an audit committee that deals with the affairs of the corporation. This committee is responsible for guaranteeing repeated success and a low number of defaults with the organization. People legible to become a member of this committee have to go through certain requirement checks because this job is extensively demanding and law-abiding.
Firstly, a director of the audit committee should be independent. This means that the person taking up this job should not have any sort of inclination towards the company that might hinder his sense of decision making. Therefore, directors who have had a prior relationship with the company like being an ex-employee or a rival company director seeking advantage of the situation are not declared as independent. Hence, they are ineligible to sit in the auditing board.
Being financially literate is another aspect of becoming an audit board member. As the committee will be continually dealing with financial statements and balance sheets, it is important for the director to have a sound knowledge of number crunching. Any mistake in reading these statements can lead to a wrong decision making process ultimately bringing damage to the organization. Each and every number should be examined carefully before reaching any conclusions at all.
Members of the auditing board should be devoted workers giving their time and patience to important decisions and checking done in the board room. They should have flexible personal routine schedules so that any upcoming personal event can be put off to another suitable date, giving more time for auditing.