Audit Committee Evolving Issues focuses on communicating to
stakeholders about the impact of adopting IFRS.
Today’s changing business and economic conditions
provide an opportunity for the audit committee to reassess its priorities and
refocus its agenda. The purpose of the Audit Committee is to strengthen the integrity of the financial reporting process and the quality of the corporate governance process.
When considering their 2010 agendas, audit committees should consider at least the following:
1. The challenges of the economic downturn (access to capital, cash flow,
liquidity, counterparty risks, impairments, etc.) have dominated audit
2. Understand how the changeover to IFRS will affect the organization and
its stakeholders, and remember that the board and the compensation
committee must also understand the implications of this change. Closely
monitor the enterprise’s progress in its conversion plan and whether work
needs to be accelerated to meet key milestones.
3. Many companies have engaged in cost cutting as the economy declined.
Every board and audit committee should now be asking whether the
company’s delivery model has been changed permanently, and whether a
‘cost-reduced’ business model can be sustained. Did we cut too much?
What are the implications for our IFRS conversion project? How quickly
can we restore critical infrastructure such as IT and sales force? How far
have we extended the organization through outsourcing and offshoring?
4. The tremendous focus on risk today provides an opportunity for the board
to reassess the oversight role of the audit committee, the full board, and
the other standing committees such as the risk committee. Does the
audit committee have the expertise and time to deal with strategic,
operational, and other risks?
5. Be vigilant. The economic downturn has placed tremendous pressure on
management to achieve operating results; at the same time, cost cutting
and workforce reductions have exacerbated the pressure on these
programs. How has the company treated its employees? How do they
think they have been treated? A comprehensive review of the company’s
anti-fraud and compliance programs may be in order. The right tone at the
top and throughout the organization is critical.
- Do you think that Audit Committees have the time to manage all of the above complex issues?
- What required expertise should Audit Committee members have proficiency in?
- In your opinion who is often elected to be member of an Audit Committee?
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