Risk management top priority for audit committees

Risk management is now top priority for audit committee members, considered
ahead of traditional accounting judgement and estimates and internal controls as
the credit crunch shows no sign of letting up and the economy grinds to a halt,
according to the yearly annual Audit Committee Member Survey conducted by
KPMG’s
Audit Committee Institute (ACI).

The survey of almost 150 UK audit committee members of public companies, and
more than 1000 audit committee members globally, on their perspectives and
priorities for the year ahead, revealed less than half of audit committee
members, at 46%, were very satisfied that their company had an effective process
to identify the potentially significant business risks facing the company; and
even fewer, at only 38%, were very satisfied with the risk reports they received
from management.
Tim Copnell, ACI head in the UK, said recession-related risks as well as the
quality of the company’s risk intelligence were two of the major oversight
concerns for audit committee members.

‘But there is also concern about the culture, tone, and incentives underlying
the company’s risk environment, with many saying the board and, or audit
committee needs to improve their effectiveness in addressing risks that may be
driven by the company’s incentive compensation structure,’ he said.

Further reading:

FRC moves to bolster audit committees

Peer blasts audit guidance proposals