Audit committees face NED shortage
A majority of audit committee members believe the enhanced role and responsibilities proposed in the Smith report will discourage individuals from taking on these types of roles.
Link: Smith report strikes at the heart of corporate governance
The research, carried out on 118 audit committee members of FTSE 350 companies, revealed almost one in three respondents believe the increased responsibilities recommended by the report by Sir Robert Smith, would discourage people from joining the committees.
And more than half of them expect companies to experience practical difficulties in finding people to fill roles on audit committees.
But a vast majority of audit committee members said they would take more responsibility in overseeing auditor independence issues and in looking over the accounts. Almost 90% said they would involve themselves more in developing company policy and 71% saw the audit committees increasing their supervision of the quality of the companies’ internal controls.
Timothy Copnell, director of the UK Audit Committee Institute, said the solution might be for larger companies to encourage senior managers to take roles in audit committees of other companies.
‘There is a role here for experienced group accountants of FTSE companies to take on non-executive positions at smaller companies. Not only would this grow the pool of talented non-executive directors, but also would enhance the abilities and therefore contribution of the individuals concerned,’ he said