Appendix 1 Matrix of regulatory framework and key features of audit committees Area Basis Regulatory framework Oversight responsibilities 2014 EU European Provisions affecting audit The EU Directive states that Directive and Union committees are contained in committees shall: Regulation4 both a 2014 Directive and Inform the administrative body of Regulation. the outcome of the statutory audit The Directive states that and explain the role of the audit EU member states shall committee in that process; ensure that each public- interest entity (PIE) has an Monitor the financial reporting audit committee. The audit process and submit committee shall be either recommendations or proposals to a standalone ensure its integrity; committee or a committee of the administrative Monitor the effectiveness of the body. However, the internal quality control, risk functions assigned to the management systems and audit committee may be internal audit (where applicable), performed by the regarding the financial reporting of administrative body as a the audited entity, without and member states have breaching its independence; certain options to decide that certain PIEs are not required to Monitor the performance of have an audit committee. audits taking into account the – findings and conclusions of the The Regulation contains a audit reviews carried out by the number of monitoring, reporting and approval competent authorities; provisions requiring oversight by Review and monitor the audit committees of independence of the statutory PIEs specifically related to auditors; and external audit oversight. Be responsible for the procedure for the selection of the statutory auditor. 4 and TXT/?uri=uriserv:OJ.L_.2014.158.01.0077.01.ENG.
Appendix 1 Matrix of regulatory framework and key features of audit committees Area Basis Regulatory framework Oversight responsibilities European Union 2014 EU Directive and Regulation4 Provisions affecting audit committees are contained in both a 2014 Directive and Regulation. The Directive states that EU member states shall ensure that each public- interest entity (PIE) has an audit committee. The audit committee shall be either a standalone committee or a committee of the administrative body. However, the functions assigned to the audit committee may be performed by the administrative body as a and member states have certain options to decide that certain PIEs are not required to have an audit committee. The Regulation contains a number of monitoring, reporting and approval provisions requiring oversight by audit committees of PIEs specifically related to external audit oversight. The EU Directive states that committees shall: Inform the administrative body of the outcome of the statutory audit and explain the role of the audit committee in that process; Monitor the financial reporting process and submit recommendations or proposals to ensure its integrity; Monitor the effectiveness of the internal quality control, risk management systems and internal audit (where applicable), regarding the financial reporting of the audited entity, without breaching its independence; Monitor the performance of audits – taking into account the findings and conclusions of the audit reviews carried out by the competent authorities; Review and monitor the independence of the statutory auditors; and Be responsible for the procedure for the selection of the statutory auditor. 4 and TXT/?uri=uriserv:OJ.L_.2014.158.01.0077.01.ENG.