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August 2, 2010

Audit committee agendas back to ‘normal’

Audit committee members around the world are beginning to see a return to normal pre-credit crisis agendas again, according to a survey by KPMG’s Audit Committee Institute (ACI).

ACI’s global survey of audit committee members found more than three-quarters of audit committee respondents say this is the case but a ‘normal’ audit committee agenda now includes more risk management and forecasting for the future.

KPMG ACI director Timothy Copnell said audit committees have learned clear lessons from the financial crisis and have adapted to accommodate these new issues.

“A return to normal is in fact a return to a ‘new normal’ in which companies and audit committees need to be perpetually alive to potential risks and economic threats… their way of working may in fact never be the same again,” Copnell said.

More than half of respondents (70%) think risk management is the top oversight priority in 2010, which is 30% more than those who think financial statement issues are top priority.

In the UK, two thirds of audit committee members are satisfied that their company has robust and mature risk management systems in place, which is well above the global average of 40%.

Only about half of UK respondents are ‘somewhat satisfied’ their company’s risk management systems enable management and the board to identify emerging risks.

ACI found evidence audit committees are receiving infrequent assessments of a company’s risk management processes. More than half of UK committees only receive annual or six-monthly updates from the internal audit team, rather than quarterly.

The survey also found forecasting assurance is a high priority as well as regulatory compliance.

One area that is low on the agenda and is a source of potential risk is sustainability and corporate social responsibility. Less than half of audit committees globally and 29% in the UK admit that they do not discuss these issues at all.

However, the ACI predicts this could be an area that some committees choose to scrutinise more closely given the high profile that environmental and responsibility issues now have.

KPMG surveyed more than 1,100 audit committee members from 28 countries, including more than 100 in the UK, between December 2009 and April 2010.

 

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