Audit committee members are becoming increasingly concerned about the quality of information they receive in respect of risks around cyber security as well as forward-looking issues relating to brand perception and talent management within companies, a survey by KPMG has revealed.
The firm's global survey of 1,500 audit committees in 34 countries found regulation, operational risk, and uncertainty and volatility top the list of concerns, with most respondents agreeing that in recent years their companies could have been better prepared to respond to significant regulatory change, ethics and compliance issues, business model disruption, and major technology developments.
UK responses in particular indicated concerns around the information the audit committee had on cyber, technology and innovation risks and on issues such as talent management and brand perception. Only 55% of respondents were satisfied that their company has identified 'leading indicators' that show where the company is headed and whether its strategy is on track, despite changes in UK reporting requirements which emphasise the need for these to be made clear.
Half (47%) of UK respondents said the quality of information about cyber security needs to be better, up from 24% the year before, and 58% were dissatisfied with the agenda time devoted to this issue. A similar proportion sad it is 'increasingly difficult', given the audit committee's expertise and heavy agenda, for the committee to oversee major risks in addition to financial reporting, while 47% were not fully confident in their understanding of the critical accounting judgements and estimates.
Just over a quarter of UK respondents said their board has recently reallocated or rebalanced risk responsibilities or created a new committee to address specific risks, or may consider doing so in the near future.
Two thirds of UK respondents (68%) said that the issue of talent management was not given sufficient agenda time, compared to the global figure of 51%. Less than 40% of respondents in both the UK and globally reported their company had a formal succession plan in place for the CFO.
Timothy Copnell, head of KPMG's UK Audit Committee Institute, said: 'This survey suggests that many audit committee agendas may be reaching a tipping point, and that it's time to step back and assess whether audit committees are able to exercise even their fundamental responsibilities in an appropriate manner.'
