For any new director, but particularly when joining the audit committee – a learning curve comes with the territory. Just how steep that learning curve is, however, and how quickly a new director is able to contribute meaningfully to the work of the board and its committees, can hinge directly on the quality of the induction programme. Our short guide provides an overview of key first steps for any new audit committee member and the management and audit professionals supporting them.
This handbook 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.
A detailed agenda is vital for keeping the committee focused and ultimately drive the work the audit committee does. This document provides a pro-forma of an audit committee meeting planner that can be used to plan what gets addressed at each meeting. It should be tailored to suit the needs of each organisation.
The audit committee should routinely assess its effectiveness. This document provides a suggested framework for the audit committee’s review of its effectiveness and the adequacy of its terms of reference and work plans.
The audit committee should consider whether employing former employees of the external auditor causes any impairment to the independence of the auditor. This document provides an example policy on employment of former employees of the external auditor.
Whistle-blowing procedures are a major line of defence against fraud and audit committees have a role in ensuring such procedures are effective. We have prepared some analysis on the barriers to effective whistle-blowing procedures and also an example policy.
It is best practice for audit committees to evaluate the effectiveness of their audit arrangements every year. This document provides a framework for an audit committee to carry out a formal review of the effectiveness and efficiency of the external auditor.
Part of the audit committee’s role is to annually review the need for an internal audit function and, where such a function exists, its effectiveness. This document provides a framework to assist audit committees when reviewing the effectiveness of the internal audit function.
Most audit committees want to meet the external auditor in a private session where management is not present as this allows the auditor to provide candid, often confidential, comments to the audit committee. The following is a list of illustrative questions intended to stimulate thought as to the type of issues that could be raised with the auditor.
This document provides an example of a year-end reporting timetable, including timing of the audit committee’s review of the annual report to ensure effective contribution is made by the audit committee.