Final answer:
The correct statement regarding corporate governance is that some private companies may not have an audit committee or board of directors. Auditors work with various levels of management throughout the audit process and non-executive members are seen as impartial and may better represent shareholders.
Step-by-step explanation:
The subject of your question revolves around corporate governance, which involves the mechanisms, processes, and relations by which corporations are controlled and directed. When considering the given statements:
- The board of directors is indeed elected by shareholders and serves as the cornerstone of corporate governance, providing oversight to the top executives. It is not the auditor's responsibility to oversee the company's accounting and financial reporting processes; their role is to independently review the financial records and issue an opinion on the truthfulness and fairness of the financial statements.
- Auditors typically engage with various levels of management and the board, including non-executive directors, throughout the audit process, not just at the end.
- It is true that some private companies may operate without a formal audit committee or board of directors, especially if they are smaller or family-owned.
- Lastly, non-executive members are often seen as more impartial since they do not partake in the day-to-day operations of the company, which can position them as potentially better representatives of shareholders' interests.
Considering this information, statement 3 is correct as it aligns with the nuances of corporate governance structures, particularly in private companies.