Get Best Practices For Audit Committee Effectiveness - Federated Press

Members of the modern Audit Committee must understand the business and ask the right questions. Audit Committee members must take the time to visit the different parts of the business, particularly an international business, to scrutinise it and get a good understanding of its workings.

Skills like negotiation, teamwork, problem solving, and communication can complement the critical “hard” financial and technical skills that audit committees need. A good audit committee will also have members who maintain the respect and trust of their peers and management and understand their role in deterring fraud.

In assessing their performance, audit committees should address two fundamental questions: Is the committee satisfied that it has effectively discharged its responsibilities as set out in its charter? How can the committee improve its operating efficiency and effectiveness?

The assessment of performance and effectiveness of the audit committee is best accomplished through a self- assessment process, and a subsequent report thereon to the board of directors. This should be done bi-annually, or at least annually. The board of directors also has responsibilities in this area.

A financial institution with an ineffective audit committee is vulnerable to regulatory consequences. The institution could find itself subject to criticism related to the audit committee's failure to fulfill its responsibilities as laid out in the audit committee charter.

The audit committee should review the financial statements and performance report before they are submitted for auditing to ensure that they are complete and accurate. The audit committee should assist in ensuring that all information and personnel are available for the audit in a timely manner.

5 Key Factors to Enhance Audit Committee Effectiveness Audit committee transparency. ... Effective communication. ... Committee composition – including appropriate skills, competencies and expertise. ... How it gets its work done – efficient and effective ways of working. ... Strength of the finance function.