Benefits of the Audit Committee Effectiveness Survey
An effective audit committee gives the board, investors, owners and stakeholders additional confidence in the organisation’s risk management, internal controls and compliance systems, audit functions and financial reports.
The Audit Committee Effectiveness Survey, created by Board Benchmarking in conjunction with KPMG, embodies best practice governance standards for audit committees. By undertaking an Audit Committee Effectiveness Survey, an organisation will demonstrate its commitment to improving its governance. Our survey statements critically challenge the audit committee functions within the organisation. The resulting report will leave an audit committee well placed to embark upon the improvement of its governance.
The pressure is on audit committees
Audit committees are rapidly becoming the principal focus of organisations that want to ensure they are meeting and exceeding their responsibilities. This is largely due to the increased demands placed upon boards and audit committees, by shareholder groups and government regulators requiring higher standards. Not surprisingly, audit committee members and boards are reviewing their current charters, mandates, membership and processes to determine whether they are properly equipped to fulfill the responsibilities of a well-functioning and well-governed audit committee.
Directors are asking themselves, “Are we fulfilling the roles and responsibilities of the audit committee?”, “Does management have the right risk management, internal controls and compliance systems in place?”, or, “Do we have the right members sitting on our audit committee?” These are fundamental questions that should be asked by directors around the world, especially in this era when high profile business failures attract significant attention.
The Audit Committee Effectiveness Survey will assist organisations as they seek to assess their own performance in a constructive way and in comparison to best practice benchmarks.
An organisation that conducts an Audit Committee Effectiveness Survey will quickly and effectively obtain clear indications of their strengths and developmental opportunities, in respect of all areas analysed by the Audit Committee Effectiveness Survey’s WhatWhoHowDo™ Framework.
Results of the survey will help an organisation understand, for example:
- whether the audit committee is performing the roles and responsibilities it should be, consistent with current regulations and views on best practices
- whether the audit committee is allocating its time properly to the core responsibilities it should be overseeing — for example, to financial reporting, risk management, controls, compliance and assurance obligations of the organisation
- the relationship (including effectiveness) among key players in the audit committee “system,” including the external auditor, internal audit function, senior and financial management, independent advisors, the audit committee and the board
- whether the appropriate leadership, subject matter expertise, and working relations are present on the audit committee
- whether the quality of discussions during meetings and separate sessions with auditors and management are conducive to achieving the valuable review process and financial oversight expected of today’s audit committees
- whether the organisation’s culture is fostering cooperation and candour between management and the audit committee; and
- whether the audit committee is getting the information and reporting required to ask the tough questions and fulfil its charter responsibilities
The Board Benchmarking Audit Committee Effectiveness Survey has been carefully designed to offer an insightful review, based on current regulations, research and best practices.
Please see the Methodology page for a thorough explanation of the entire range of issues considered when an Audit Committee Effectiveness Survey is carried out.
Other specific reasons for carrying out a Board Benchmarking Audit Committee Effectiveness Survey include the following:
- All Board Benchmarking surveys are based on the unique WhatWhoHowDo™ Framework
- The Board Benchmarking Audit Committee Effectiveness Survey report provides boards and their audit committees with a clear benchmark of their performance, including areas of strength and opportunities where improvements may be made; it also acts as a benchmark against which to measure improvements that will increase committee effectiveness, board effectiveness and, in doing so, ultimately, organisational effectiveness
- The Board Benchmarking Audit Committee Effectiveness Survey report is easily understood and includes a unique one page summary of a committee’s effectiveness
- The report compares the committee’s self assessed effectiveness against a benchmark database of past participants
- All Board Benchmarking reviews encourage candour by preserving the anonymity of participants by the aggregation of their responses; the security and confidentiality of participants’ responses is a central tenet
- While the Audit Committee Effectiveness Survey report is designed to show a very clear road map for improvement, Board Benchmarking’s distribution partners are available to provide both data analysis and interpretation; Board Benchmarking works with recognised specialists in industry segments and geographies