Audit Committees (aka ACs) fulfill a vital governance role for accurate financial reporting and controls, enterprise risk assessment, and so much more. Boards are under increasing scrutiny from regulators, investors, and activists. Committee workloads are expanding in scope, complexity and volume —particularly the burdens placed on the AC to keep up with changing regulations, the management of stakeholder expectations, and the oversight of emerging issues. Agendas are often overflowing.
Careful prioritization and planning help your AC fulfill its responsibility to provide effective and transparent oversight. Below are some practical tips and tools to efficiently accomplish goals, including charter requirements:
Agenda Planning Considerations for your Financial Institution’s Audit Committee
- Use the AC charter as the starting point to plan your calendar and related agendas for the year since it’s a shareholder commitment and reflects required actions. It helps to map out topics at the beginning of each year while remaining agile to address emerging issues, regulatory and tax changes, and other unexpected items throughout the year.
- Designate a management liaison, such as the corporate secretary, chief audit executive, or CFO, to work with your financial institution’s AC chair to set committee agendas.
- Focus first on priority issues and ensure you manage meetings to hit all planned agenda items.
Pre-meeting Materials for your Financial Institution’s Audit Committee
The criticality of the governance function of the AC can make meetings time-consuming, especially for institutions that are SEC registrants. Consider the volume of information AC members need to review and oversee careful preparation of information, which should ideally be distributed at least one week in advance. Best practices include:
- Executive summaries and dashboards that are concise, focused, and offer management insight on high-priority items, such as major changes to SEC or regulatory filings, unresolved audit findings, meaningful trends, and risk assessment results. These reports, with advance distribution, help AC members understand primary issues without experiencing information overload.
- Graphics highlight trends. Many reports and filings present information in nearly identical charts and other visuals. Highlight changes in pre-meeting materials for quick reference to call attention to important changes that will be discussed at the meeting.
- Appendices with details can provide in-depth information, as considered appropriate. You may want to consult with your financial institution’s counsel to understand the AC’s obligation, if any, to review appendices. Their guidance might influence executive summary and dashboard details.
More Tips for a More Effective Audit Committee Meeting
Schedule brief meetings with stakeholders —usually the CFO, controller, chief audit executive or third-party firm executive, external auditor, and others who will add value to AC meetings by their ability to clarify information and answer questions related to topics on the agenda for your upcoming AC meeting. These pre-meetings can help strengthen relationships, provide guidance on priority and emergent issues, and alert participants to questions and challenges they may hear during the AC meeting.
For a confidential review of your financial institution’s AC meeting process and preparation, including the development of an effective plan, contact your Rehmann advisor or Heidi Cieslik, a principal specializing in risk advisory services at Rehmann:248.952.5000 or [email protected].
