1. Ministry of Finance of the Czech Republic Audit Committee Lukáš Pečeňa Coordinator for FM&C and Audit

2. Ministry of Finance of the Czech Republic Purpose of audit committee 2 „Management don`t always have the same goal as board have.” Owners are trying to maximize long – term value. Management seeks to maximize short-term profit.

3. Ministry of Finance of the Czech Republic The audit committe is the board’s agent for assurance… 3 Management Runs the organization Have full knowledge of its operations Is responsible for their activity Internal audit Examines the critical risks Is independent of management operations External audit Examines the financial statements Offers independent opinion of both management and internal audit

4. Ministry of Finance of the Czech Republic Audit Committee Responsibilities 4 Oversee the institution’s policy Oversight risk management Oversight of internal audit Approve an internal audit plan Monitor audit activity’s performance Adequacy of management response to issues identified by audit Adequacy of resources of the audit activity Approve HR issues (recruitement, appointment, removal of the CAE) Oversight of external audit The effectiveness of the Audit Committee’s own work – value for money

5. Ministry of Finance of the Czech Republic The ideal public audit committee structure 5 2 years < Appointed of terms < 8 years

6. Ministry of Finance of the Czech Republic Hurdles to overcome when setting up audit committees Composition of audit committees Administrative burden and cost of audit committees Committing Officers and governance bodies on audit committees 6

7. Ministry of Finance of the Czech Republic What is the lesson to learn? Important and iconic people that lead the audit committee AC fulfills the role of a kind of Supervisory Board for the management. AC takes over control function. Board is able to focus on management and developement. AC is responsible for implementation international audit standart principles. Publish annual reports on the activities of individual departments. 7