Reference no: EM132745136

Whilst completing your training contract, you spent many hours on corporate governance work, and have become quite knowledgeable on the various aspects thereof. A family friend who is the chief executive officer of Indigo (Pty) Ltd, a large manufacturing company and one of your firms audit clients, is considering establishing an audit committee and has asked you around informally to give him a better insight into audit committees. You are not a member of Indigo (Pty) Ltd.'s audit team. During the discussion he posed the following questions, You are required to respond to each of the below questions.

Problem 1: Will it be my duty to appoint the audit committee and to be the chairman of the committee?

Problem 2: What exactly is an audit committee and is it any different to our internal audit department?

Problem 3: What should the composition of the audit committee be assuming that we would want to comply with the requirements of King IV?

Problem 4: Can you give me four benefits of having an audit committee and are there any disadvantages?

Problem 5: How can we, as a company, ensure that we have a successful audit committee?