Code of Corporate Governance
According to Frank and Graeme (2005) the followings are considered essential for effective operations of corporate governance in any public limited liability company;
1) Half-yearly financial statement prepared by the management of the entity and subject to a limited scope review (not audited) by the external auditors. Such a review should be conducted and reported in accordance with International Standard on Auditing (ISA) 910. Auditors are also required to issue an engagement letter.
2) It is the responsibility of an auditor not to engage in an entity whose shares he holds, or his blood relatives hold. Hence, such auditor must disclose the interest to the company within 14 days of his appointment and divested within 90 days if he wishes to be engaged.
3) Auditor should not hold office unless they have been given a satisfactory rating under the quality control review programme of International Federation of Accounting Committee’s (IFAC’s) guidelines on code of ethics.
4) No auditor should hold an office for more than five (5) years. Where this becomes impracticable then, the partner in-charge of audit engagement must be rotated.
5) Auditor should furnish management with a letter to the board of directors of the entity not later than 30 days from the date of audit report.
6) Auditor should attend the Annual General Meeting at which the audited accounts shall be laid before the shareholders for considerations.
7) Auditor should not accept non-audit assignments from the company such as management consultancy, designing of accounting systems, compilation of accounts, share registrar services etc.
8) Auditor should review and certify the statement of compliance with best practice of corporate governance prepared by the management of the company before publication to the extent where such compliance can be objectively verified (Wikipedia).
The above listed codes have been issued to serve as standards and guidelines for part of the governance of an organization that deals with certifying the truthfulness and fairness of financial statements (Kala 2005). They serve as the judge who either justifies or condemn the board of directors based on the information presented in the financial statement.