The Center for Audit Quality and Deloitte have released a new report on audit committee effectiveness and priorities.
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The new report supplements that earlier report and offers more granular findings on the audit committee's work. It includes strategies for effective oversight by audit committees; getting the most out of management discussions; and effective board-level engagement.
Many of the respondents and interviewees see untapped potential in internal audit, with some functions still centered on operational audits. "In some instances, interviewees thought there were opportunities for the internal audit organization to provide more support to the external audit," said the report.
Cybersecurity is seen as a critical issue, with many audit committee members pursuing the relevant training. Boards rely on senior management and specialized outside consultants for their specialization, instead of appointing dedicated cybersecurity experts, due to the rapidly evolving nature of the field.
Oversight of artificial intelligence is becoming more prevalent, according to the report, with some industries further along than others. Quantum computing hasn't yet been addressed by many boards or audit committees but it's seen as a topic requiring further education and discussion.
All the interviewees rated the quality of presentations to audit committees as high. But 22 of the 27 respondents believe presentations often take up so much time that little remains for discussion or questions. Many of the presenters spend too much time reading content that was already provided in the original materials. In some cases, key points could be lost because of the volume of information presented.
Presenters should assume members have read the materials and focus on summarizing key points to allow more time for discussion. "Lengthy readouts of routine communications should be avoided," said the report. "Chairs can enforce time limits and manage the agenda to ensure meaningful engagement."
