Large public company audit committee chairs shared their perspectives on what distinguishes high-performing audit committees in today’s complex risk and regulatory environment in a new Tapestry Networks / EY ViewPoints report: “Staying ahead of the curve: lessons from leading audit committee chairs.” Drawing on discussions among audit committee leaders, the report highlights practical considerations for strengthening oversight across four themes: (1) foundations of a high-performing audit committee, (2) good practices for effective meetings, (3) managing key relationships, and (4) staying curious.
Among the key takeaways:
Foundations of a High-Performing Audit Committee
- Right composition: Committees are most effective when they are appropriately sized and composed of directors with strong financial literacy and broad, complementary experiences and perspectives aligned with the company’s evolving risk profile.
- Sound processes: Robust onboarding, ongoing education, thoughtful succession planning (including for the chair), and meaningful evaluation processes support sustained effectiveness.
- Clear responsibilities and boundaries: Given expanding mandates, high-performing committees periodically review their charters and coordinate closely with other committees and the full board to avoid overload, overlap, or gaps in oversight.
Good Practices for Effective Meetings
- Disciplined agendas and materials: Purposeful but flexible agendas—supported by streamlined, well-focused pre-read materials—enable deeper, forward-looking discussion of critical risks and significant judgments.
- Executive sessions: Standing executive sessions—with management, internal audit, and the external auditor as appropriate—are viewed as a meaningful value-add in promoting candor and independence.
- Effective leadership: Effective chairs promote balanced participation, constructive challenge, and rigorous advance preparation to optimize meeting focus and dialogue.
Managing Key Relationships
- Relationships with management: Constructive, trust-based engagement with the CFO, internal audit, the corporate secretary, and other control function leaders supports early identification of issues and balanced, rigorous oversight.
- External auditor: Strong, transparent relationships—paired with appropriate independence and periodic assessment—are central to audit quality and effective oversight. Careful planning and oversight of auditor transitions are particularly critical.
Staying Curious
- Continuous learning: High-performing audit committees invest in ongoing education to stay current on regulatory, geopolitical, macroeconomic, technological, and other developments, as well as evolving stakeholder expectations.
- Adaptability: In a rapidly changing environment—strongly influenced by AI and other technological developments—audit committees that remain inquisitive, ask probing questions, and periodically reassess their practices are better positioned to anticipate and respond to emerging risks.
Access additional resources on our Audit Committees page.
This post first appeared in the weekly Society Alert!