KPMG Issues 2017 Global Audit Committee Pulse Survey

Recently, KPMG released its 2017 Global Audit Committee Pulse Survey, which reports on audit committee activities based on survey responses from 800 audit committee members across 42 countries. Asking, "Is Everything Under Control?," the Survey identified many familiar issues and concerns for audit committee members.

Overall, surveyed respondents reported confidence in their company's financial reporting and audit quality but expressed concerns regarding risk management, legal and regulatory compliance, managing cyber security risk, and managing the control environment. Many of these concerns are similar to concerns identified in past surveys. (See our previous post about the 2015 Global Audit Committee Survey.)

Based on the data collected, the Survey offered the following six takeaways:

Risk management is a top concern for audit committees. Internal audit can maximize its value to the organization by focusing on key areas of risk and the adequacy of the company's risk management processes generally. Tone at the top, culture, and short-termism are major challenges—and may need more attention. CFO succession planning and bench strength in the finance organization continue to be weak spots. Two key financial reporting issues may need a more prominent place on audit committee agendas: Implementation of new accounting standards and non-GAAP financial measures. Audit committee effectiveness hinges on understanding the business. As noted in the Survey, "It's hardly surprising that risk is top of mind for audit committees—and very likely, the full board—given expectations for slow growth and economic uncertainty, technology advances and business model disruption, cyber threats, and greater regulatory scrutiny and investor demands for transparency." The top three challenges identified by surveyed respondents were (1) effectiveness of the risk management program, (2) legal/regulatory compliance, and (3) maintaining the control environment in the company's extended organization. More than 40% of surveyed respondents believe their risk management program and processes "require substantial work," and a similar number believe "it is increasingly difficult to oversee those major risks." The Survey further stated that "[w]e are clearly seeing an increased focus by boards on key operational risks across the extended global organization," with boards being more sensitive to the matters of tone at the top and organizational culture.

Cyber security and...