Fundamentals of Risk Management

regulatory reports
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review arrangements for producing the audited accounts
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monitor and review standards of risk management and internal control
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develop a code of ethics for CEO and other senior management roles
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annually review the adequacy of the risk management processes
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receive reports on litigation, financial commitments and other liabilities
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receive reports of any issues raised by whistleblowing activities

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Risk assurance
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for the identification of significant risks or the identification and implementation
of critical controls.
The function of the audit committee is to seek risk assurance and check that the 
procedure for the identification of significant risks is appropriate. The audit commit-
tee should validate that the significant risks have been correctly identified, as well as 
seeking assurance that critical controls have been correctly implemented.
The audit committee is concerned with internal control in the organization. 
Internal control is described in guidance to the UK Corporate Governance Code as 
the whole system of controls, financial and otherwise, established in order to provide 
reasonable assurance of effective and efficient internal control and compliance with 
laws and regulations.
It is worth considering the role of the audit committee in relation to the require-
ments of the UK Corporate Governance Code. The code only applies to companies 
that are listed on the London Stock Exchange, although the principles set out in the 
code appear to be gaining wider acceptance and application. One of the require-
ments is that companies without an internal audit function should review the need 
for such a department on a routine basis.
Even if these requirements do not apply to an organization, it is still appropriate 
for the audit committee to ensure that it can fully respond to these questions, by ensur-
ing that necessary information is collected. An important component of governance 
requirements is the acknowledgement of the limitations of internal control.