Audit Committee Leadership Network, December 2020
Every audit committee fulfils the same central responsibilities for financial reporting oversight, but committee practices vary from company to company. Perhaps because of this diversity, members of the Audit Committee Leadership Network (ACLN) were eager to exchange perspectives and practices on committee leadership. The conversation took place virtually on November 2, 2020.
The discussion focused on three topics:
Preparation makes meetings both thorough and efficient
Audit chairs prepare, often well in advance of committee meetings, by consulting with management, other directors, and the external auditor. They use these interactions to prioritize topics and structure meetings for efficient use of time. They also coach executives and other attendees on presentation styles and work with them to make materials fit for purpose.
Strong leadership enhances audit committee performance
Asserting control over the agenda and meeting mechanics can be important to fulfilling a committee’s oversight responsibilities. Audit chairs budget time, use executive sessions and deep dives, and connect with committee members by email or telephone to ensure that key items receive coverage. Dedicated meetings and calls around statutory filings and earnings releases allow audit committees to focus on critical accounting and reporting events apart from their other work.
Audit committees’ expanded scope calls for collaboration and creative division of responsibility
Today’s audit committees have wider oversight responsibilities than before. Managing this in collaboration with other committees can be critical for ensuring that the board works effectively as a whole. Some audit chairs call for additional standing or ad hoc committees, such as cybersecurity or risk, to give emerging topics the requisite degree of rigor.