After the Sarbanes-Oxley Act (SOX), auditing has undergone several changes. Auditors now check on finance, processes, in-house controls, and corporate ethics and compliance. In fact, the audit committee’s responsibilities also include overseeing cybersecurity and ESG practices. With their expanding roles, processes have become more complex. So, learning about other auditors’ activities can help you do your job better. In this article at Harvard Law School Forum on Corporate Governance, find out what experts from 246 companies say about audit committee responsibilities.
Audit Committee Responsibilities
According to 32 percent of experts, the quality of auditing has increased. Whereas 66 percent believe it has remained the same by embracing technologies during the pandemic. 85 percent of the respondents opine capabilities and communication skills define an audit team’s excellence.
Finance and Controls
24 percent of the participants believe that improving these core areas is one of the audit committee’s responsibilities. Meanwhile, 73 percent think the time allotted last year is sufficient to look after finances and internal controls of a company.
42 percent affirm that the risk of fraudulent activities has spiked. 74 percent improved their internal controls to battle this risk area. Large companies’ audit committee responsibilities include internal auditing and controls and technology-based risk management.
According to the study, 42 percent of the audit teams, 33 percent of board executives, and 20 percent of the risk team led enterprise risk management. 32 percent of them spent more time on ERM than in the past year.
While 53 percent were dedicated to cybersecurity oversight, 43 percent felt data privacy was one of their audit committee responsibilities. 69 percent will work more on securing their companies because 62 percent claim cybersecurity tops their concern list.
Ethics and Compliance
48 percent of the respondents look after ethics and compliance, while 47 percent keep an eye on third-party vulnerabilities. Interestingly, audit teams in the U.S. are thrice as likely to prioritize ethics and compliance over third-party risks.
Engaging a Team for Audit Committee Responsibilities
Large companies spend more hours on fraud risk, risk-mitigating through technology, and ESG than small organizations. In fact, large enterprises are 1.5 times more likely to have over 100 hours of annual activities in these areas.
This Audit Committee Practices Report also suggests that audit teams spend 96 percent of their time on financial reporting and internal controls. The area also tops their quarterly meeting agenda (89%), closely followed by ethics and compliance (74%) and cybersecurity (60%).
Interestingly, 73 percent of the respondents believe they will spend more hours on ESG reporting and the least on ethics and compliance. Additionally, financial reporting, cybersecurity, and ERM efficiency will be the three focus areas of audit committee responsibilities.
The report has also shared various statistics on auditing quality, ESG, critical auditing areas, external audit oversight, expert capabilities, and meeting practices and materials used.
To view the original article in full, visit the following link: https://corpgov.law.harvard.edu/2022/02/21/audit-committee-practices-report/