The audit process, particularly of large cap companies, as well as the wider accountancy profession, is coming under ever more intense scrutiny. This has obvious implications for the Audit Committee and its Chair.
In the wake of recent scandals such as the collapse of Carillion, the audit profession is now facing comprehensive review. Its alleged failures, particularly, of the so called ‘Big 4’ firms have been investigated by the UK Competition Markets Authority and the Kingman Review.
Fidelio’s clear focus is building Boards “fit for the future”, with the Audit Committee providing a critical pillar of governance. Peer networks represent an important element of Board learning. As such, we were pleased to host our third Roundtable Breakfast for Audit Committee Chairs reviewing (i) how Boards are responding to prospective changes in the regulatory landscape and (ii) what leading Audit Committee Chairs see as the primary challenges for Audit Committees in the UK and internationally.
The following priorities were identified by Audit Committee Chairs from a range of sectors and geographies.
- Board Culture, Skills and Board Composition – the health of corporate culture is a Board issue with Audit Committee making an important contribution, for example to understanding how culture can be assessed and reviewed. The focus on diversity and inclusion throughout the company should not be neglected in the Audit Committee and its own composition.
- Regulation and the Future of Audit – the regulatory landscape for the audit process is changing fast. Audit Committee Chairs see clear risks but also acknowledge that there is a communication issue surrounding the views of industry practitioners which appear to be out of step with the broader societal perspective – the so-called “Expectations gap”.
- Technology and the Audit Committee – are regulators keeping pace with technology which will surely transform the profession, as well as the Audit process? And how best to attract bright young talent into the Audit profession – a traditional first career step for many of today’s Audit Committee Chairs.
- Disruption, Investors and Climate Change – the challenge of climate change has rapidly climbed the Board Agenda. TCFD reporting, for example, rapidly moves from being a reporting exercise coming to the Audit Committee to a business model risk for the main Board.
For the full discussion from Fidelio’s third Audit Committee Roundtable, please click here.