Audit committee chairs face growing demands

Leaders of corporate audit committees are confronting new and emerging challenges, according to a new report.

The report, released Thursday by Deloitte, found audit committee chairs face growing demands in the areas they’re expected to address in the future. For the report, the firm interviewed audit committee chairs who represent large-cap S&P 500 companies listed on major exchanges. Their challenges include anticipating and navigating emerging risks, evolving from technical to strategic advisors, cultivating continual learning and curiosity, and modernizing committee processes for agility.

Audit committee chairs no longer focus mainly on financial reporting and compliance with accounting and auditing standards, the report noted. Their role extends into various facets of the company. 

The report draws on insights from conversations with audit committee chairs and explores how audit committee chairs are driving the expansion of the committee’s responsibilities as central for proactive enterprise risk management. It discusses the shift toward broader business experience and strategic competencies for audit committee chairs and members. Committee chairs are putting more emphasis on structured boardroom learning and the use of AI in committee operations.

“As the scope of the audit committee chair’s role expands, we’re seeing these leaders guide their committees through an increasingly complex landscape,” said Dipti Gulati, U.S. audit and assurance CEO at Deloitte & Touche LLP. “Today’s chairs lead their committees to anticipate and respond to disruptions — from advances in AI to shifts in the geopolitical environment — by fostering a culture of curiosity and transparency that empowers agile, confident action.”Effective audit committee chairs blend established governance best practices with forward-thinking strategies to anticipate and respond to risks with agile adaptability to help their organizations navigate ongoing transformation.”

Some audit committee chairs interviewed for the report believe technologies such as AI could transform audit committee operations by allowing more efficient prioritization and synthesis of vast volumes of information. AI tools can help evaluate valuation drivers, generate executive summaries, improve documentation, and automate processes such as minute-taking, so committees cam focus on the most critical issues. But while the potential benefits of AI are promising, there are still questions about how to effectively and responsibly leverage AI in the boardroom, and none of the chairs interviewed have completely resolved this challenge. 

The ability of audit committees and their chairs to meet future challenges will likely depend on their willingness to adapt and balance tradition with innovation, leveraging the strengths of their members while staying flexible and responsive to change.