Liquidity, access to capital and cash management are among the recession-related risks raising concerns on audit committees this year, according to a survey by KPMG.
At the Big Four firm's fourth annual Audit Committee Issues Conference, the majority of attendees cited recession-related risks as their top concern, followed by the quality of the company's risk intelligence, the tone at the top and the organizational culture. Among the risks identified by attendees were market volatility stemming from the subprime mortgage crisis.
Henry Keizer, vice chair of audit at KPMG, emphasized that an audit committee needs to understand the company's debt situation, including debt maturities and access to capital markets, as well as the impact of the recession on the company's supply chain and distribution channels.
The quality of a company's risk intelligence is also a top concern of audit committee members. Forty-four percent of the conference attendees said their company's processes for identifying significant business risks needed to be improved, while 18 percent said the risk reports that management provides to the audit committee were not meaningful or useful.
KPMG's Audit Committee Institute sponsored the conference along with the National Association of Corporate Directors and the law firm of Weil Gotshal & Manges.
