Posted by Heidi Schwartz
Audit committees around the world said economic and political uncertainty and volatility, regulatory compliance, and operational risk pose the greatest challenges for companies in the year ahead, according to a new survey from KPMG of 1,500 audit committee members in 36 countries. For the second straight year, they also said it is increasingly difficult, given the audit committee’s time and expertise, to oversee major risks in addition to financial reporting.
Three out of four surveyed said the time required to carry out their audit committee responsibilities has increased significantly (24 percent) or moderately (51 percent), and half said the job continues to grow more difficult given the committee’s time and expertise. Many audit committees say they have at least some responsibility for significant aspects of risk oversight—in addition to financial reporting—such as cyber security and technology, global compliance, and operational risks, or the company’s risk processes generally.
Asked which issues will require more attention in 2015, survey respondents cited cyber security and the pace of technology change, risk management and operational risk, and regulatory compliance.
The KPMG survey highlights a number of ongoing challenges and concerns globally:
- The quality of risk information is falling short—particularly on cyber security and technology risk, talent and innovation, and business model disruption.
- The company’s readiness to respond to loss of critical infrastructure—financial systems, telecommunications networks, transportation, energy/power—may require more attention.
- CFO succession planning continues to be a major gap, with many audit committees ranking themselves lowest in this area.
In the U.S., audit committees continue to express confidence in their oversight of financial reporting and audit, although cyber security and the pace of technology change were cited as particularly challenging issues requiring greater attention in the year ahead.
Assessing their overall effectiveness, audit committees around the world said they would most benefit from a better understanding of the company’s strategy and risks; more “white space” time on the agenda for open dialogue; greater diversity of thinking, perspectives, and experiences; and technology expertise on the committee.
KPMG’s 2015 Global Audit Committee Survey is available here.