""There is a lot of pressure on audit committees to stand up and be counted in the reform process and to take action to improve their effectiveness." Investor
Audit committees are now expected to do more and to do it better. They are dependent for their effectiveness on strong leadership, engaged committee members and having plenty of support from key advisors.
These are the key findings of research commissioned by Ernst & Young among audit committee chairs, board directors, investors, regulators, audit executives, academics and other subject matter experts across Europe.
The purpose of the research undertaken was to determine how leading audit committees are currently improving their effectiveness against a backdrop of increasing pressure from regulators and shareholders.
More responsibility . . .
An increase in regulatory responsibility and demands from external stakeholders has resulted in a sharp expansion in audit committee workload. Audit committees are now heavily involved in strengthening corporate governance, as well as overseeing risk, fraud and compliance.
Making sure that financial reporting is of the highest quality is a key responsibility, as well as seeking more disclosures from the work of auditors.
… but is it getting too much?
Many contributors to the research undertaken worry that audit committees are taking on too much. In the light of this, they are acting to improve their practices in three key areas: seeking more direction and leadership from audit chairs, encouraging even more engagement from committee members and expecting more of internal and external advisors.
Striving to improve
Leading audit committees also understand that they need to evaluate themselves and their practices on a regular basis, to improve oversight processes and better protect shareholder value.
Our research highlights a number of leading practices they can adopt. But a good audit committee will not stop there: it will challenge itself constantly to fulfill its mandate more effectively.
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