Three out of four audit committee members say they have increased their hands-on involvement with management, and are reassessing risk management and oversight as a result of the economic crisis, according to a new survey.
The survey of approximately 280 audit committee members, by KPMGs Audit Committee Institute and the National Association of Corporate Directors, indicated that economic conditions are driving board members at public companies to recalibrate the way they work amid concerns about financial crisis risks and the quality of the information they are receiving. The board directors concerns about the financial crisis are leading to deeper oversight at their companies, especially on the audit committee.
Board oversight is very different from what it was a year or two agoand it has to be. The velocity of change and risk demands it. said KPMG global head of audit Henry R. Keizer (pictured). More than ever, directors need access to the right information, at the right time, from the right source.
Audit committee members identified risks related to the financial crisis and oversight of risk management as their top two agenda priorities for 2009, according to the survey. In addition, directors expressed concerns about the quality of information they are receiving, particularly information related to the financial risks posed by information technology (48 percent), tax issues (30 percent), the economic crisis (22 percent) and fraud (22 percent).
While 95 percent of audit committee members rated their committee as effective or very effective, many also said key oversight processes could be improved. Approximately one-third of the audit committee members who were surveyed said that agendas needed to be better prioritized, with less box-checking. Two-thirds say more meeting time should be devoted to discussion and questions versus listening to presentations.
Half of the respondents are concerned that the audit committees evaluation process for the CFO may not be adequate. Similarly, 25 percent expressed concern about evaluation of the internal audit function.
