Critical and challenges issues facing the audit committee.
Dissatisfaction on the organization's governance activities-risk management, controls, compliance, crisis response, strategy and board oversight on the company's reputation and brands are areas of concern.
The 2013 Audit Committee Landscape for enforcement and concerns continue to be on the same issues as during the previous years. These are the supervision of financial reporting, audit quality, risk management, globalization, digitization, regulatory compliance, and similar issues based on the individual committee charter.
Based on some of the highlights from our own research the following issues will be discussed at the Audit Committee conference on the 17th April 2013 in Copenhagen:
- There is a compelling dissatisfaction on the risk management processes and systems. Substantial work is needed to develop a companywide crisis-plan due to the short sightedness of the current risk activity in the organisation.
- More time and analysis and care should be devoted to the non-audited financial information— e.g., Non-GAAP performance metrics, earnings releases and analyst calls.
- The company’s disclosures are not always comprehensible because unrealistic business plans and budget targets, analysts’ earnings estimates and incentive compensation targets place pressures on financial reporting integrity.
- The lowest ratings on risk-related data quality are in the areas of cybersecurity, global systemic risk and the pace of technology change.
- Internal audit should focus more on the key enterprise wide risks in the operations.
- The uncertainties and potential impact of government regulation and macroeconomic policies including increased emphasis on global compliance of the FCPA and U.K. Bribery Act are areas of concern.
- Most audit committee members would like to receive additional knowledge on IT, risk, M&A and industry knowledge.
- External auditors should provide more industry insights and benchmarking.
