Question

1.Why do you think that the qualities of objectivity and independence are important for the board of directors and auditing committees?

2.Some individuals view the establishment of the SEC as unnecessary and unproductive. Do you agree or disagree? Why?

Answer 1

Answer:

1) Board of director and auditing committee are play a critical role in the company.

Board of director independence means all or a majority of the members of the Boards do not have relationship with the company except as directors. Independence director role broadly includes to improve corporate credibility and governance standards functioning as a watchdog, and playing a vital role in risk management.

Audit committee is a committee of the board of directors who is responsible for oversight of the financial reporting process, selection of independent auditor and receipt of result both internal and external auditor.

2) No, SEC is a organisation who is regulated the capital market. If any company want to raise the fund through capital market then SEC is regulated the process of raising the fund in such manner that interest of individual investor can be protect.