A well-functioning Audit Committee is the key to achieve good governance.
Since the Audit Committee conference last year, we have helped several businesses to function according to the Copenhagen Compliance GRC principles and practices. For audit committee, we add the extra element of accounting and auditing standards and to adopt or update an appropriate risk management framework.
As part of experience and advice, we have developed an Audit Committee assessment tool to assist the committee members with practical guidance, review and tips based on the performance of the Audit Committee (AC) survey.
The audit committees have now come to grips with the added compliance and governance burdens and risk management overreaches. We do believe that the functions of the audit committee have developed magnificently since the responsibility trusted on them by the Sarbanes-Oxley Act of 2002, which made them the local oversight of accounting, financial reporting, internal controls, and audits.
Effective Audit Committees
The AC survey or assessment often revealed that there was a need to ensure the basic audit committee structure was in order. Therefore, we will go through some of the most common findings:
Update the AC charter. Prepare a document with scenarios on how to adhere to the written charter. The document should establish audit committee role, authority, and responsibilities. It is often also a plus to update skills and experience of AC members.
Audit committee members need to possess the necessary competencies for the AC to perform its duties and function effectively based on the charter; however, it is advisable to define the critical success factors so that there is both a benchmark and a threshold to the KPI's.
Good Habits
Some of the annual priorities of the AC should reflect those core values of the organization. These values could also be based on the policy or mission statements. In certain cases, the AC have provided written procedures on how to embrace open dialogue based on the IT development of the company, provide guidance on how to enter into mediation or warranted conflict resolution based on the interests or qualifications of the committee members.
In some cases, we have developed formal procedures on how committee members can relate back to the charter when unusual circumstances or even disputes require the need for expertise to be invited or offer "safe haven".
Largely we believe that the AC has significantly improved because they have the capability to ask penetrating questions, are involved in setting the GRC agenda, and continually review the company's vision, core values, and critical success factors.
If you wish to use the Riskability IT Tool or sample a demo version, send us an email.
