Audit committees in the United States and elsewhere are feeling the crush of regulatory demands, uncertainty, volatility, and operational risks, with only half of audit committees saying confidently they have the time and expertise they need to do their jobs effectively.
In a recent global survey of nearly 1,500 audit committee members, KPMG's Audit Committee Institute found 43 percent who said they are finding it increasingly difficult to put forth the time and expertise necessary to oversee the major risks on their agenda on top of carrying out their usual oversight duties. Another 7 percent said they simply can't keep up. The results for U.S. audit committees were similar, with 42 percent saying it's hard to keep up and 5 percent saying it's not possible.
KPMG says many audit committees are reporting increasing primary responsibility for a number of major business risks in addition to their duties to oversee financial reporting and internal controls. In the United States, 45 percent of audit committee members said their committee has primary responsibility for IT risk and cyber security, and 45 percent are in charge of anti-bribery and corruption efforts. Audit committees have oversight duties for legal and regulatory compliance, said 42 percent of respondents, and for risk management, according to 34 percent. Operational and supply chain risks fall to the audit committee as well, said 12 percent of respondents.
Many U.S. audit committee members said they'd like to get more help from internal audit beyond financial reporting and internal controls in a number of the areas where their responsibilities are growing. Nearly 70 percent said they could use a hand with information technology and data management; 60 percent want more support with risk management processes; 49 percent want more help with operational risks; 43 percent said they'd like more internal audit help with compliance and regulation, and 29 percent said IA could lend a bigger hand with corruption and fraud.
As for increasing reporting audit committee activity to investors, 53 percent in the United States said they are opposed to any kind of new reporting requirements for audit committees, whereas 21 percent said they would favor increased reporting of the audit committee's role in risk governance. Only 20 percent said they would support more reporting on the committee's oversight and evaluation of the external auditor. Various bodies have suggested audit committees could consider such reporting, although the groups calling for more reporting are not those who have the authority to require it.
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