Compliance, Cyber Security, Internal Controls Also High On Agendas
More than 40 percent of audit committee members surveyed recently say their risk management programs/processes require “substantial work,” and a similar percentage say that it is increasingly difficult to oversee major risks, according to a new report from KPMG’s Audit Committee Institute.
While audit committees in general express confidence in financial reporting and audit quality, they rank legal/regulatory compliance, cyber security risk, company controls around risk, and tone at the top and organizational culture as among their top challenges in ACI’s 2017 Global Audit Committee Pulse Survey.
“The audit committee’s job isn’t getting any easier, particularly given the uncertainty, volatility, and complexity of today’s business environment,” said Sharon G. Dayoan, Vice Chairman and Head of Audit of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG. “These findings reinforce the practices and priorities that are essential for audit committees to keep pace – starting with having a solid understanding of the business and the critical risks it faces.”
She further adds, “The conclusions of the survey suggest to strengthen existing methods of audit committees given the increasing susceptibility to threats. As part of having a better understanding of the business and its risks, it will be helpful to be more adept and informed in the areas of technology and cyber security.”
KPMG surveyed more than 800 audit committee members and chairs in 42 countries, providing insights that audit committees around the world can use to sharpen their focus, benchmark responsibilities and practices, and strengthen oversight.
Overall, audit committees are largely satisfied that their agendas are properly focused on legal and regulatory compliance issues, maintaining internal controls over financial reporting, and key assumptions underlying critical accounting estimates. However, they see room for improvement when it comes to focusing on CFO succession planning, talent and skills in the finance organization, tone at the top and culture, and aligning the company's short-and long-term priorities.
Nearly 4 in 10 said the committee’s effectiveness would be most improved by having a “better understanding of the business and key risks,” while nearly a third said additional expertise related to technology or cyber security would be helpful.
The report highlights six key takeaways:
Read the 2017 Global Audit Committee Pulse Survey.
Sponsored by more than 35 member firms around the world, KPMG’s Audit Committee Institutes provide audit committee and board members with practical insights, resources, and peer exchange opportunities focused on strengthening oversight of financial reporting and audit quality and the array of challenges facing boards and businesses today—from risk management and emerging technologies to strategy and global compliance.
For further information,
Cristina Roxas Loquinario
Markets Assistant Manager
KPMG R.G. Manabat & Co.
Telephone +63 (2) 885 7000 ext. 339