Roberts is a family owned company: the principle activity is planning high-end wedding cakes and supplies...

 

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Roberts is a family owned company: the principle activity is planning high-end wedding cakes and supplies to major wedding fairs. The Company 20 stores in Scotland and employs 900 staff. The company share structure consists of 10 individuals all from within the family and maximum shareholding is 25%. The executive board of directors are also the shareholders. Roberts has one non- executive director but he is the son-in-law of the CEO. The board of directors are considering an expansion which includes purchasing a warehouse with state-of-the-art fridges to store the cakes. The finance manager has prepared the financial statements because the finance director has not been at work due to a bereavement. The bank is concerned with the financial statements as they do not seem to be complete. Roberts has no internal audit function and the board fails to recognize the importance of an internal audit function and also dismiss the internal control systems that may need reviewing. The board of Roberts have received a proposal from the finance manager outlining that the company needs to determine an audit committee; consisting of two executive directors, three new appointments, including the senior internal auditor, non-executive to form the new board of directors. Required: a) Explain the importance to Roberts of forming an audit committee and ensure compliance with the Financial Reporting Council (FRC). Roberts is a family owned company: the principle activity is planning high-end wedding cakes and supplies to major wedding fairs. The Company 20 stores in Scotland and employs 900 staff. The company share structure consists of 10 individuals all from within the family and maximum shareholding is 25%. The executive board of directors are also the shareholders. Roberts has one non- executive director but he is the son-in-law of the CEO. The board of directors are considering an expansion which includes purchasing a warehouse with state-of-the-art fridges to store the cakes. The finance manager has prepared the financial statements because the finance director has not been at work due to a bereavement. The bank is concerned with the financial statements as they do not seem to be complete. Roberts has no internal audit function and the board fails to recognize the importance of an internal audit function and also dismiss the internal control systems that may need reviewing. The board of Roberts have received a proposal from the finance manager outlining that the company needs to determine an audit committee; consisting of two executive directors, three new appointments, including the senior internal auditor, non-executive to form the new board of directors. Required: a) Explain the importance to Roberts of forming an audit committee and ensure compliance with the Financial Reporting Council (FRC).

Answer rating: 100% (QA)

Answer Importance of forming audit committee and compliance with Financial reporting council The Financial Reporting Council FRC is the UKs regulator for the accounting audit and actuarial professions ... View the full answer