Audit Committee Best Practices 

This web site provides Audit Committees with tools and techniques to fulfill the demanding tasks, taking into account the recent developments.
Audit Committee Institute

 

Audit Committee Workload

Global Boardroom Insights

 

Audit committee chairs, by nature, are detail-oriented and demanding, eager to tackle complex issues, and good at managing heavy agendas and telling it like it is. So when a chorus of seasoned audit committee chairs – like those we interviewed in this edition of Global Boardroom Insights – say the audit committee’s workload may be reaching a tipping point, every board’s antenna should go up.

 

Six interviews from around the world shed light on how audit committee agendas are evolving, and approaches that seasoned audit committee chairs are taking to help the committee focus its time and energy on the issues that matter most.

Starting with “learn to say no”, several key insights from the audit committee chairs of Apple, Carlsberg and Imperial Tobacco inter alia are included in the publication.


You’re sure to find common challenges, and perhaps a few uncommon approaches, to making the most of the audit committee’s time, expertise, and value to the business.

 

You can download Audit Committee Workload ( 1,06 MB).

 

 

Audit Committee Effectiveness
Global Boardroom Insights


If you’re on an audit committee —or work closely with one—you know the committee’s workload isn’t getting any lighter, and the job isn’t getting any simpler.

 

In addition to their “core” duties—oversight of financial reporting and internal and external auditors, which are a substantial undertaking and time commitment—many audit committees also oversee a host of major risks facing the company: From cyber security, emerging technologies and social media, to compliance risks posed by increased government regulation and stepped-up enforcement efforts globally, many audit committee agendas today could even be mistaken for a “risk committee’s” agenda.

 

Audit committee effectiveness clearly hinges on some fundamentals, including 'the right committee composition and dynamics; an up-to-date charter with well-defined responsibilities; a risk-based approach to setting the committee's agenda; an understanding of current and emerging issues; and proactive, engaged oversight--beyond the boardroom.

 

In this issue of Global Boardroom Insights, we revisit the fundamentals of audit committee effectiveness with the audit committee chairs of LVMH Group, General Electric, Lenovo, Deutsche Bank, Wolseley Plc and Fubon. But we’ve also gone a step further to explore the practices and nuances that these audit committee chairs consider vital to being truly effective in a complex and rapidly changing environment.

 

We hope you find this global interview series to be a valuable resource from KPMG’s ACI, which was founded more than a decade ago – and now spans more than 30 countries worldwide – to support audit committees and boards with practical insights, resources, and peer-exchange opportunities.

 

You can download Audit Committee Effectiveness ( 2,42 MB).


 

The Cyber Security Challenge

As many companies and organizations are recognizing – and experiencing first-hand – cyber attacks are no longer a matter of if, but when.

 

Recent cyber breaches at major corporations highlight the increasing sophistication, stealth, and persistence of cyber attacks that organizations are facing today – from nation-states, organized crime, and hacktivists, as well as threats from within the organization (which often pose the greatest risk).

 

The critical challenge of protecting information systems and assets – financial information, customer data, intellectual property – and the reputational and regulatory implications of failing to do so continue to raise the stakes on cyber security and governance. Investors and regulators are increasingly challenging boards to step up their oversight of cyber security and calling for greater transparency around major breaches and their impact on the business.

 

Not surprisingly, cyber risk is rapidly climbing up on the audit committee's agenda. According to KPMG's 2014 Global Audit Committee Survey nearly 40 percent of audit committees have primary oversight responsibility for cyber security risks, and 45 percent believe the audit committee (or board) doesn't devote sufficient time to cyber security.

 

In this edition of KPMG's Global Boardroom Insights, we take a deep dive into this issue, exploring key elements of effective cyber risk oversight and governance – from understanding key vulnerabilities and integrating cyber security into the overall risk management program, to ensuring effective communication and reporting from the CIO (or equivalent role) and having a robust cyber-incident response plan in place.

 

You can download The Cyber Security Challenge ( 2,48 MB).


Insights into IFRS: An overview

It was not so long ago that the mention of IFRS immediately conjured up thoughts only of the four major projects (financial instruments, insurance, leases and revenue) and convergence with US GAAP. But today, the key word is 'consistency' - consistency of application and consistency of enforcement.

 

Having achieved the adoption of IFRS in over 100 countries, thereby creating a platform for the comparability of financial statements, the drive for increased global consistency across that platform is the logical next step.

 

The IASB has signaled its intention to lead this drive, but all stakeholders - including preparers, auditors and enforcers - have a role to play. For us, consistency does not necessarily mean an identical answer in all cases; rather, it means applying the principles of the standards in the same way, to reach a conclusion based on a particular set of facts and circumstances. And we look forward to playing our part.

 

At its heart, Insights into IFRS is all about consistency - explaining the standards and illustrating their application through examples based on the collective experience of IFRS specialists from around the global KPMG network. This companion guide, Insights into IFRS: An overview, is designed to help Audit Committee members and others by providing a structured guide to the key issues arising from the standards.

 

You can download Insights into IFRS - An overview ( 1,44 MB).

 

Audit Committee Handbook
Corporate governance excellence continues to be an important element of business, both in the UK and across the globe. Expectations of stakeholders have never been higher, and the scrutiny by regulators and investors never more stringent. As a consequence, the role of the audit committee has rapidly increased in importance and expanded in scope.


In today’s complex and evolving business environment, audit committees can make a strong contribution to a ‘no surprises’ environment and an effective audit committee can be a key feature of a strong corporate governance culture, bringing signifi cant benefits to an organisation.


Such committees are supported by fundamental building blocks: an appropriate structure and foundation; reasonable and well defi ned responsibilities; an understanding of current and emerging issues; and a proactive, risk-based approach to its work.
Carefully designed practices can also help an audit committee to maximise its contribution to an organisation. However, it is important that each board and audit committee should assess its own circumstances, governance structure, financial complexity, maturity and issues – when defi ning its specific audit committee practices. Practices that work best for one organisation may not be ideal for another – especially in a governance environment where culture, risk and governance needs can vary dramatically from organisation to organisation. Nevertheless, certain guiding principles underlie the effectiveness of every audit committee and the right principles can help to ensure that ‘company specific’ practices are applied effectively – that is, by the right people with the right information, processes and perspectives.


This publication, applicable to organisations in either public or the private sectors, articulates the principles underlying the audit committee’s role and provides non-prescriptive guidance to help audit committees gain a better understanding of the processes and practices that help create effective audit committees.


The UK regulatory landscape is explored in Chapter 1 while the composition of the audit committee and the procedures and practices that provide the support and structure necessary to discharge an audit committee’s duties, are discussed in Chapter 2.


Chapter’s 3 to 8 focus on the duties of the audit committee: monitoring the corporate reporting process; monitoring the effectiveness of internal control and risk management systems; monitoring the effectiveness of internal and external audit; and communication with shareholders.


At the back of this book are a number of appendices that are intended to provide practical support to audit committees.
We hope this publication provides practical guidance to help audit committees to identify and achieve their objectives and add value to the board of directors, the organisation and its stakeholders. 
 

You can download the Audit Committee Handbook (2,9 MB).

 

 

The Annual General Meeting (AGM) provides a platform on which shareholders can engage in active dialogue with the executive directors and the supervisory board.

 

Shareholders' Questions 2011 has been prepared in order to assist directors in their preparation for their company's Annual General Meeting. This publication suggests questions that shareholders are likely to ask with a view to helping directors and management plan and develop informed responses.  

 

You can download the Shareholders' Questions 2011 here (1,06 MB).

 

Bound copies of Shareholders' Questions 2011 can be obtained from the Audit Committee Institute by sending us an e-mail at auditcommittee@kpmg.nl or at telephone no. +31 (0)20 6 567098.

 

The role of those responsible for corporate governance and the financial reporting process, continues to face intense scrutiny by regulators, legislators, security analysts, institutional investors and the general public. Attention is being focused not only on the board of directors but also on those committees that have been delegated responsibility and accountability by the board. Audit committees are clearly viewed as a critical component of the overall corporate governance process. Accordingly, many audit committees are examining the nature and extent of their supervisory roles, members' qualifications and independence, and their interaction and involvement with the audit process.

 

By comparing practices currently being performed to leading industry practices, audit committees can identify and select a 'set' of practices as the most effective and efficient in its particular circumstances.

Audit committees can benefit from comparing their practices against the practices described on this website in an effort to improve their own practices. The Audit Committee Institute focuses on practices audit committee members can undertake to improve their effectiveness. One of the instruments to improve own practices is the publication 'Shaping the Audit Committee Agenda'. This publication does provide Audit Committees with tools and techniques to fulfill the demanding tasks of their practice.

 

Shaping the Audit Committee Agenda ( 3,92 MB), including guidance for implementation of the Dutch corporate governance code.

 

Bound copies of Shaping the Audit Committee Agenda can be obtained from the Audit Committee Institute by sending us an e-mail at auditcommittee@kpmg.nl or at telephone no. +31 (0)20 656 7098.