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IFAC: Audit committees must rise to the challenges of the new normal

As the Covid-19 pandemic continues to impact the way we live and work, the International Federation of Accountants (IFAC) and the Institute of Internal Auditors (IIA) have issued a call to action for audit committees to ‘ensure objective oversight of organisational activities, including risk management, performance, controls, and key processes’.

IFAC and the IIA have developed specifications for organisations to aid them in confronting uncertainties that may threaten their integrity, transparency and accountability.

IIA president and CEO Ricard Chambers said: “We must be aggressive and future-oriented in prioritising and managing new threats and vulnerabilities, while not being distracted from existing risks. Governing bodies and their audit committees, in particular, must be highly vigilant, nimble, and well engaged to ensure they as well as management and others are receiving objective assurance and insight on critical aspects of organisational activity.”

IFAC and the IIA have called on governing bodies and their audit committees to:

  1. Stay informed: Maintain a timely and clear understanding of the continuously-evolving operating environment and how it may impact organisational objectives and performance.
  2. Communicate and collaborate: Adopt a multi-disciplinary approach to exercising oversight of internal and external audit and reporting through dynamic communication and collaboration.
  3. Leverage available expertise: Seek qualified and reliable assurance and advice on management evaluations of, and responses to, the organisation’s continuously evolving risks and risk profile. 
  4. Promote continuous improvement: Encourage innovation and change to address vulnerabilities and to build resilience, strengthening the pursuit of value creation.
  5. Think holistically: Adopt a broad perspective of the organisation and its environment across both financial and nonfinancial goals, considering interconnectivity with other organisations, internal and external interdependencies, and the central importance of people.
  6. Embrace technology: Optimise the performance of the audit committee through the use of technology and flexible working practices.

IFAC CEO Kevin Dancey said: “The impacts of COVID-19 on the global economy will be felt for years, if not decades. This creates long-term risks and uncertainties that organisations need to confront head-on through strong governance and internal controls. We hope these recommendations will support governing bodies and audit committees as they navigate the continuously evolving operating environment of today and tomorrow.”

 

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