Talent International Media (Talent) specialises in production, promotion, and distribution of both domestic and imported films. Recently, Talent plans to be listed on the Shenzhen Stock Exchange within the next six months. Its management has been advised by the company’s auditors about the need for compliance with corporate governance provisions. In particular, the chief executive officer is looking to recruit non-executive directors as he understands that Talent will need to establish an audit committee.

The chief executive officer has three potential non-executive directors whom he is considering to approach. David Bee is currently an executive finance director of a large listed real estate company. David agreed to be paid a fixed fee which is not related to the profit of the company. Steven Tong is currently a sales director of a small film and television company which does not compete with Talent. Steven sits on the audit committee of another company as a non-executive director. Steven is the brother of one of Talent’s executive directors. Jessica Wong is currently a professor in a local art college teaching acting. Her daughter is the chief accountant in the finance department of Talent. She has expressed an interest in a fixed five years contract.

Required

a) Discuss the benefits to Talent International Media of establishing an audit committee.

b) Advise Talent International Media the advantages and disadvantages of appointing David Bee, Steven Tong and Jessica Wong as its non-executive directors.