Effective Audit Committees

Section 1: The Role, Responsibilities and Essentials of of Audit Committee Members

• The role of the Audit Committee as delegated by the board, typical structure, membership, terms of reference and agenda items
• The role of advisors and the role of the Company Secretary
• The provision of information to the Audit Committee

What are the Audit Committee Essentials?

• Oversight of financial reporting, audit quality, and other risks on the committee’s agenda
• Understanding the company, its culture and its dynamics
• Demonstrating sound industry knowledge and access to contacts
• Appropriate relationships with other board members, senior management, internal and external auditors
• Understanding current and emerging issues (e.g. cyber security, emerging technologies and social media)
• Understanding the full range of management information provided to the Audit Committee
• Case study: “Looking at the essential qualities of an Audit Committee member”

Section 2: Overview of the Relationships with Key Stakeholders

The Finance Team

• How to provide effective oversight and challenge to the annual report and accounts
• Dealing with the requirement for the annual report to be ‘fair, balanced and understandable’
• Assessing the new strategic report
• Understanding the Committee’s role in reviewing regulatory returns
• Case study: Understanding the structure of a typical report and accounts, including examples of good and poor annual reports

External Audit

• Roles and responsibilities for external auditors in relation to audit committees
• Assessing external auditor effectiveness
• Governance requirements and the latest guidance from the Financial Reporting Council (FRC)
• Re-tendering the external audit role and evaluating external audit pitches

Section 3: Internal Audits

• Roles and responsibilities for internal auditors in relation to audit committees
• Governance requirements and the UK Financial Services guidance (the “FS Code”)
• Understand the guidance from the Basel Committee on Banking Supervision for assessing the effectiveness of the internal audit function in banks
• Understanding the internal audit universe and the annual risk-based internal audit planning process
• Internal Audit reports, gradings and links to the Board Risk Committee
• Evaluating internal audit effectiveness

Section 4: Audit Committee Activities

Membership and Attendance

• Guidance for nomination committees
• Independence and how this is defined
• Remuneration
• Who should attend and why
• Private meetings
• Importance of papers, minutes, actions and follow-up
• Practical strategies to build your network
• Case study: Assessing some examples of good and poor Audit Committee minutes

Financial Reporting

• Annual report and accounts
• Strategic report and the relationship with the CRO and the board risk committee
• Results announcements
• AGM involvement

Section 5: Guidance on what must be Included in the Audit Committee Report

• A summary of its role
• Members, their qualifications and meetings held
• Significant issues considered in relation to the financial statements
• How they assessed the external auditors’ appointment
• Tenure of the current auditors and time of last tender
• Contractual restrictions on auditor choice
• External audit fees and non-audit services
• Case study: Reviewing examples of good practice Audit Committee reports 

Complex Transactions

• Members of committees in financial services companies should have sufficient relevant expertise to understand how complex transactions and financial instruments are recorded and valued

Whistle-blowing

• Relationship with Compliance
• Damage limitation
• Case study: Real life whistle blowing examples and outcomes

Section 6: Audit Committee Effectiveness

• The Role of the Audit Committee Chair
• A balance between teamwork and challenge
• Working with company secretariat
• Setting the agenda and planning the work of the committee
• Time allocation
• Private meetings
• Informal meetings outside committee
• Relationships with the members of the executive management team
• Length of service
• Succession planning

Annual Reviews of External and Internal Audit Effectiveness

• Who performs them?
• Guidance for self-assessment
• Typical areas of concern

Annual Review of Audit Committee effectiveness

• Guidance re self-assessment
• When should there be an independent review
• Typical areas of concern

• Final Discussion and Notes
• Training Evaluation