Why conduct
With the Global Financial Crisis and the increasing call for improved corporate governance and board accountability, right now is one of the most important times to carry out a world class Audit Committee Effectiveness Survey.
Audit committees can demonstrate their leadership, their commitment to good corporate governance and accountability to stakeholders by conducting an independent review of their effectiveness.
Most people understand the importance and benefits of a regular medical check up to identify any risks to their health and to determine whether their bodies are functioning to their optimal capacity.
In a similar way, Insync Surveys recommends the regular use of its Audit Committee Effectiveness Survey to determine any risks to the “health” of the Committee and the extent to which it is functioning to its optimal capacity.
Most audit committees are responsible for overseeing risk management, internal controls and compliance, financial reporting and the internal and external audit function.
All of these are very important areas of oversight in most medium and large organisations and many boards rely heavily on the input and expertise of their audit committee accordingly.
It is important both for board members on the audit committee and also for those not on the audit committee that a thorough review of the committee’s effectiveness is carried out on a regular basis.
The Audit Committee Effectiveness Survey benchmarks the effectiveness of audit committees against comparable organisations, whether they be public and private companies, government and not-for-profit entities.
An audit committee review can be done by using the Audit Committee Effectiveness Survey, either separately or in conjunction with committee member and management interviews, reviews of committee charters, agendas, committee papers, minutes and the like by experienced board and audit specialists.
The comprehensive report that is prepared following completion of the survey is designed to measure the current extent of effectiveness and to highlight improvement initiatives.
Internal self administered surveys
Many audit committees that conduct an audit committee survey use their own internal self administered survey to assess their effectiveness. Some of the limitations of using such surveys, however, include:
- they are rarely comprehensive in the issues they address
- the survey statements often are inappropriately worded and untested
- the survey process can be prone to bias and often lacks statistical rigour
- they do not promote candour as respondent anonymity isn’t protected
- without benchmarking or an appropriate gap analysis, the results are often incorrectly interpreted
