The main challenge for the Audit Committee
The main challenge for the Audit Committee is to stay focused on the business in the pursuit of the company's economic performance.
As a result of business and accounting complexity, the audit committee agendas provide a significant commercial analysis for the board of directors and the management teams.
According to a recent issue of the World Economic Outlook; due to the weak growth prospects in the leading world economies, euro crisis, global deficits and global imbalances, it is even more critical that Companies to rebuild their business practices. The Audit Committee needs to focus is on establishing strong processes and principles to stimulate growth in the organization, in spite of increasingly complex business conditions using the components of Governance, Risk & Compliance (GRC) structures and practices.
The most pressing concern continues to be the additional escalation of the euro zone crisis, oil prices and global deficits will provoke a much more generalized flight from risk. This will affect growth and performance if these tensions are accompanied by significant financial volatility and losses in confidence. These are the worries of a perfect storm and we must do everything possible to avoid it.
The Audit Committee needs the tools to plan, design, prepare and implement the common GRC legislation, standards and best practices to ensure that your team is fully updated on the regulatory developments and support the organization with the tactics and strategies to achieve the best results for your entire Organization.
The Audit Committee needs to focus on improvements concerning the clarification of the competences and responsibilities and reporting by the accounting and finance departments. These improvements would be beneficial to companies, having in mind that the main purpose of audit committees is to ensure the quality of financial reporting, overall internal control and risk management.
Clearly audit committee/board cannot just focus their attention on financial reporting issues. They need to prioritize and allocate resources to ensure Governance, Risk management, Compliance and IT security. Some of the current issues facing the audit committees are:
- Threat posed by expansion plans and change issues created by the pressures of continued growth in a tepid economic recovery
- The impact of policy initiatives related to risk management and corporate strategy
- IT risk and emerging technologies e.g. technology changes involving The Cloud computing to social media to mobile devices and related cyber-security issues
- Indentify the systemic risks facing the organization
- Financial, legal, reputational and strategic issues, posed by information technology
Risk management will continue to be a work in progress requiring substantial work on the significant risks facing the business and provide oversight of the overall risk processes Current legal/regulatory mandates - including Dodd-Frank whistleblower rules, FCPA and the U.K. Bribery Act are changing the audit committee perspective to ensure effective compliance and controls.
Elsewhere in these newsletters we will provide several suggestions so that you can think over the situations and scenarios, pick and choose and be inspired to create the most perfect Audit Committee agenda for 2013 for the organization or company.