The U.S.-based Center for Audit Quality has teamed up with two organizations in Europe and Australia on a new report that highlights the similar issues facing audit committees around the world.
The new report, Global Observations on the Role of the Audit Committee, discusses some of the common challenges identified during a multi-continent discussion series on enhancing public company audit committee effectiveness, including the role of the audit committee and the scope of its responsibilities, increasing transparency, and educating stakeholders on the role of the audit committee.
For the report, the CAQ partnered with the Federation of European Accountants and the Institute of Chartered Accountants in Australia. In January and February, the three organizations co-sponsored a series of roundtable discussions in Brussels, Hong Kong, and New York City, inviting the members of governance and audit committees based in the region.
The objective was to offer a forum for representatives of the global audit committee community to discuss ways to strengthen audit committee practice and determine the general level of global consensus on issues affecting the role of the audit committee and its current state of performance.
“The report exposes the fact that audit committees—at companies based in the United States, Asia and in Europe —are facing and embracing many of the same issues,” said CAQ executive director Cindy Fornelli in a statement. “Discussions are taking place in every corner of the globe about identifying leading audit committee practices, ensuring greater consistency in the performance of audit committees across the spectrum of public companies, and enhancing transparency about how they meet their obligations to investors. The CAQ, FEE and the ICAA embarked on the discussion series in our shared belief that it is critical that the global audit committee community have a strong, respected and unified voice in those discussions.”
The report focuses on observations that apply to audit committee performance regardless of geography, while also highlighting the differences between jurisdictional requirements.
Generally, the participants in all three jurisdictions emphasized the importance of the audit committee chair acting as a strong leader in order to promote audit committee effectiveness. “The chair should foster productive relationships with the board of directors, management, and the external and internal auditors, and the audit committee should serve as a communication hub for matters raised by these parties,” said the report. “The audit committee chair also should promote robust communication within the committee itself, and encourage audit committee members to ask critical questions of management, internal audit and the external auditor. At each roundtable, the benefit of an audit committee composed of members with diverse experience and expertise was emphasized, and a complement of financial and non-financial expertise was encouraged to enhance the objectivity and skepticism of committee members.”
The three organizations plan to continue their dialogue to promote greater consistency of practice among audit committees as well as to share best practices and identify further training needs for audit committees.