Addressing investor -activism and -dissatisfaction on demand
Stakeholder and Investor dissatisfaction resulting in shareholder activism are due to a greater demand for transparency, accountability and oversight over the companies’ corporate governance and performance process.
When the Board of Directors (BoD) and the Audit Committee (AC) update the future central role, the AC will play a vital role and provide the GRC components that go way beyond enhancing the audit quality and building confidence in the integrity of financial disclosures.
Therefore the BoD has to rethink their engagement and communication practices, enhance the audit committee charter to respond to the new rules and demands to comply with stakeholders in general and the investor in particular.
Sustainable growth and corporate performance
The new stewardship role of the audit committee is critical to create the right environment and to understand shareholder expectations for a closer scrutiny of the company’s remuneration, corporate transactions, succession planning and performance, areas with heavy AC involvement.
The BoD/AC must also prepare for uncertainty in the global economy due to Brexit, continued low-interest rates, and the lack of sustainable growth. Corporate performance including the board's responsibility to create a platform of the business culture of integrity, respect, accountability and transparency. Audit committees must develop an audit strategy, to address significant audit risks, appropriate independence and effectiveness of the external auditor. It is important that they
Some of the future issues that AC must address;
- Communicate the audit committee’s approach to key regulatory and compliance issues
- Make investors aware of the audit committee’s view on policy debates
- Play a more active role in remuneration decisions and disclosures
- Consider more direct engagement with shareholders on audit issues
There is no one-size-fits-all or universal solution for all businesses, as now almost everyone wants to know almost everything about performance and non-compliance pitfalls. That is the essential truth on corporate compliance
The AC can always begin by assessing the company's specific needs for data, audit, compliance, and risk. Part II is to compile a detailed benchmarking report on the above issues in order to make better decisions about the GRC and IT obligations
The Audit Committee Report each quarter can then provide the details on:
- A detailed analysis of a company's performance, auditor and rich insight peer group comparisons, disclosures and reporting trends.
- An analysis of audit/consultancy fees, auditor tenure, and oversight inspection reports, auditor ratification, trends in restatements, controls, monitoring and oversight comments
Information and links on the two audit conferences
