Today I thought we'd continue in the audit committee vein. In a piece at Director of Finance Online, KPMG corporate governance director Tim Copnell lists seven items that should be on audit committee "to-do" lists this year. (The headline may say 10, but the list stops at seven -- really.)
Understandably, he says the first priority should be to "serve as a catalyst" to reduce the company's risks and improve board oversight of risk management processes. The audit committee is in a good position to help coordinate risk management activities of the board's various activities.
Next on the list is ensuring that the company's disclosure processes are adequate and that disclosures made are accurate. Copnell says the subprime credit crisis will likely increase scrutiny on disclosure.
Third, Copnell notes that it's important for audit committee members to be up to speed on the latest developments in accounting standards and financial reporting requirements. The convergence of U.S. Generally Acceptable Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS) is only one of the issues that audit committees will have to address.
Finally, near the bottom of the list, but perhaps key to everything else Copnell mentions, he says the audit committee should always be prepared for a crisis. After a crime happens, he says, it's too late to come up with a crisis management plan. Company reputations are at stake, and "time is of the essense."
All in all, it's clear that as the number and complexity of regulations to which public companies are subject increases, the responsibilities of the audit committee also increase.