SHINING THE SPOTLIGHT ON THE AUDIT COMMITTEE
The basic role and responsibilities of an audit committee are well understood – monitoring the integrity of financial statements, reviewing risk management and internal control systems, recommending the appointment of external auditors and monitoring their independence and work. However, the recent financial crisis (as with previous well documented corporate collapses) has all too graphically illustrated the importance of ‘effective’ audit committees rather than simple compliance with statute, regulation and codes of best practice. Empowered and independent audit committees, with highly qualified and competent members who are actively engaged in overseeing all aspects of the financial reporting and audit process, can play a critical role in the financial reporting value chain and in helping to challenge management and auditor judgments as appropriate.
With this in mind, KPMG’s Audit Committee Institute (ACI) has surveyed over 1800 audit committee members around the world, across a diverse range of business sectors and entities – and the results have exposed some very interesting revelations for UK audit committees. Respondents are coming to terms with the greater expectations placed upon them but are also not entirely happy with some of the fundamentals of the audit committee role. If audit committees are to be more effective and efficient, audit committee chairmen (and members) must start to take control of their own destinies and work with management on the fundamentals as well as the new responsibilities falling within many audit committee remits.
Jan-Mar 2013 Issue