Risk Management, Accounting Judgments and IT Risk Governance: Audit Committee Agendas
According a survey from KPMG and the National Association of Corporate Directors. The top priority for audit committee agendas are:
1. Risk Management
2. Accounting Judgments and Estimates
3. IT Risk and Governance
28 percent of audit committee members are “very satisfied” they understand the process that management uses to identify and assess significant business risks, and only 21 percent are “very satisfied” with the risk reports they receive from management
And, while nine out of 10 respondents say their audit committee is more effective now than before the Sarbanes-Oxley legislation was enacted in 2002, many acknowledge there is still room for improvement — particularly in the area of risk management, which they cited as their top priority.
“The current business and regulatory environment is sharpening the audit committee’s focus on risk management,” said Henry R. Keizer, Vice Chair - Audit, KPMG LLP. “The near ‘perfect storm’ of the credit crunch, economic slowdown and market volatility has placed risk management high on the audit committee agenda, where it is likely to stay for some time.”
Overall, the nearly 300 public company audit committee members who responded to this year’s survey ranked risk management as their top priority, replacing accounting judgments and estimates, which moved to second on the list.
Information Technology (IT) risk and governance moved up to third, with respondents indicating the least confidence in this area. One quarter of respondents said they were not clear about the areas of IT risk the audit committee is responsible to oversee and 26 percent said they were not satisfied with management’s reports on IT risks.
Survey respondents expressed the highest levels of confidence in their oversight of traditional financial reporting areas, including accounting judgments and estimates, internal controls, and 404 compliance.
Popularity: 26% [?]
