As the global business ecosystem continues to grapple with escalating uncertainties and unprecedented disruptions, the role of the audit committee has never been more crucial. The risk and control environment is being reshaped in unexpected ways, placing enormous pressure on all stakeholders. Herein, the audit committee stands as a bellwether for both the business and the board, illuminating the way forward through the turbulent tides.
To gain insights into how audit committee members are juggling their burgeoning workload and oversight responsibilities amidst these tumultuous times, the KPMG Board Leadership Center and Audit Committee Institute carried out an enlightening global survey in early 2023. This article explores the responses from 144 U.S. audit committee members and chairs who participated in this survey.
Key Takeaways from the Survey
Macrotrends Impacting the Audit Committee's Agenda: As significant global trends continue to emerge and evolve, they are reshaping the risk landscape and adding layers of complexity to the audit committee's focus and agenda.
Expanded Oversight Responsibilities: While the full board is accountable for overseeing mission-critical risks, the survey notes a persistent expansion in the risk oversight responsibilities of the audit committees.
Greater Involvement in ESG Disclosures: Audit committees have been heavily engaged in overseeing Environmental, Social, and Governance (ESG) and sustainability disclosures. Expectations are that their involvement will deepen even further.
Areas of Concern in Risk Management and Reporting: Despite the general consensus that risk management and reporting are robust, concerns linger around digital activities, potential oversight gaps, and talent.
Intense Scrutiny of Audit Committee's Skills and Expertise: In this dynamic environment, the skills and expertise of audit committee members are under a closer lens than ever before.
Need for Key Adjustments: The survey highlights the need for improvements, particularly in the quality and flow of information, to enhance the effectiveness of the audit committee.
Perceived Oversight Gaps
When audit committee members were asked about the enterprise risks that concerned them the most in terms of potential oversight gaps, the responses were as follows:
Cybersecurity/Data Privacy/AI: 44%
Human Capital Management: 29%
Legal/Regulatory Compliance: 24%
General Concern - Reassessment of Risks and Oversight Responsibilities: 23%
ESG/Sustainability Generally: 22%
Supply Chain: 20%
Geopolitical Risks: 17%
Mergers & Acquisitions (M&A): 17%
Climate-Related Risks: 8%
These insights underscore the necessity for audit committees to broaden their scope and ensure comprehensive oversight across these risk areas.
The report also includes an appendix with survey data from audit committee members and chairs from 19 countries, thus providing a global perspective on these issues.
We hope these findings will spark invigorating conversations among your audit committee, board, and management teams, enabling you to navigate through the complex challenges that lie ahead in the evolving global business landscape. As always, steering through these turbulent waters requires adaptability, strategic foresight, and robust oversight—attributes that are now the touchstones of audit committee effectiveness.
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