Art 2/3: Shared Responsibility for Audit Issues and the Importance of Audit Committee Effectiveness/:The Importance of Continuous Dialogue

Resolving audit issues is a shared responsibility among auditors, audit committees, boards of directors, and senior management of listed companies. Each party has a unique role to play in addressing audit issues and ensuring the integrity of the financial reporting process.

?

Audit committees, as the central independent party, are crucial in handling and addressing audit issues. They serve as a bridge between the auditors and management, facilitating effective communication and resolution of audit matters. The effectiveness of audit committees is paramount in maintaining the quality of the audit process.

?

Examples of how audit committees contribute to resolving audit issues include:

1. Regularly meeting with auditors to discuss audit findings, concerns, and recommendations.

2. Reviewing management's responses to audit issues and ensuring that appropriate actions are taken to address them.

3. Overseeing the implementation of corrective measures and monitoring their effectiveness.

4. Ensuring that the audit committee has the necessary expertise and resources to effectively discharge its responsibilities.

?

To enhance the effectiveness of audit committees, several measures can be taken:

1. Transparent disclosure of audit committee activities and fair compensation to maintain work quality.

2. Disclosure of time allocation, including time spent on board meetings, auditor interactions, management interviews, and company events, to demonstrate the committee's dedication.

3. Scrutiny of relationships between audit committee members, shareholders, and management to ensure independence and objectivity.

4. Flexibility in disclosure, allowing management to reveal the dynamics between audit committee members, shareholders, and governance bodies, as a testament to the company's commitment to enhancing corporate governance.

?

Article 3: The Importance of Continuous Dialogue and Material Development in High-Quality Audits

High-quality audits extend beyond the involvement of audit committees and auditors. While their roles are essential, the quality of an audit also hinges on continuous dialogue about the material development of the client.

?

Continuous dialogue between auditors and clients is crucial for understanding the client's operations, risks, and subtle financial intricacies. Regular discussions help auditors stay informed about material developments, such as changes in IT systems, business strategies, acquisitions, or regulatory shifts, allowing them to adapt their audit approach accordingly.

?

Examples of how continuous dialogue enhances audit quality include:

1. Timely identification of emerging risks and their potential impact on the financial statements.

2. Proactive adjustment of audit procedures to address changes in the client's business environment.

3. Enhanced understanding of complex transactions and their accounting implications.

4. Improved communication between auditors and management, leading to a more efficient and effective audit process.

?

Moreover, audit quality is a never-ending quest that evolves with changes in the business environment, standards, and technology. A robust audit involves sound judgments, consistency, and confidence in verified results, enhancing the reliability of financial statements and aiding in obtaining loans and attracting business partners, including talents.