Audit Committee Leadership Summit, April 2018
For members of the European and North American Audit Committee Leadership Networks (EACLN and ACLN), improving the effectiveness of their audit committees is a perennial challenge, driven by the need to address new and unfamiliar issues even as traditional audit committee concerns remain as demanding as ever. On April 16–17, 2018, the two networks met in London for their 13th annual summit, which included a session on audit committee effectiveness.
The audit chairs discussed good practices in three areas:
Assessing the audit committee and its chair
Audit committees identify opportunities for improving effectiveness by assessing their performance on a regular basis. They use a range of approaches, including formal questionnaires and one-on-one conversations, and they gather input from management and their external auditors, as well as from their own members and other members of the board. Outside assistance with the process can add rigor and perspectives gleaned from other boards.
Keeping the audit committee up-to-date and informed
To stay in sync with constantly changing regulations and standards, audit committees talk to people both inside and outside the company, often tracking new requirements from their earliest stages of development. Some committees have members of management gather and synthesize information, and most try to carve out time and even extra meetings for deep dives on key issues, including new and complicated areas of oversight (such as cybersecurity), as well as regulatory changes.
Onboarding new audit committee members
Audit chairs noted that onboarding is crucial in helping new audit committee members become effective, and they highlighted the importance of quality interactions between incoming members and key executives, other board members, and the external auditor. One objective of these interactions is to ensure that new members fully understand the business of the company and the risks it faces.