Question

1. Please answer the two parts of this question.

a) Do Boards of Directors assess management's attitude, philosophy, and operating style? Do they assess the competence of staff and managers?

b) Do the auditors assess management's attitude, philosophy, and operating style? Do they assess the competence of staff and managers?

Answer 1

a) Yes. Board of Directors do assess management's attitude, philosophy, and operating style. The difference between Board of Directors (BoD) and Management is that BoD take decisions whereas management carries out those decisions. Hence, BoD oversees the performance of the management. As governance is one of the primary functions of BoD, they do assess the competence of staff and managers at the top level.

b) No, the external auditors do not assess management's attitude, philosophy, and operating style or competency of staff and managers. The auditors only assess and evaluate the performance of the company's financial statements. It does not take part in company's internal matters.