Audit committees set priorities | Accounting Today

A majority of audit committee members are eyeing cybersecurity as a top priority in the next 12 months, followed by enterprise risk management and talent, according to a new survey.

The survey, released Tuesday by the Center for Audit Quality and Deloitte’s Center for Board Effectiveness, polled 266 respondents, mostly from public companies, and found most respondents (69%) indicated that cybersecurity will be in the top-three priority areas for the audit committee in the next 12 months, while 30% ranked cybersecurity as the No. 1 priority for the audit committee in that period. One of the main reasons could be concerns about the SEC’s recent cybersecurity rule.

Enterprise risk management ranked as the No. 2 priority, with 48% of respondents indicating that ERM will be a top-three priority in the next 12 months. 

Finance and internal audit talent is a priority for audit committees, with 37% of respondents indicating it’s one of their top-three priorities over the next 12 months; 9% suggested it’s the top issue. Forty-six percent noted that their committee addressed the topic quarterly, whereas 23% discussed the matter once in the past 12 months.

“We are seeing the role of the audit committee continue to evolve and adapt as demands on oversight responsibilities change with the business environment and investor expectations,” said Vanessa Teitelbaum, senior director of professional practice at the CAQ, in a statement. “Audit committees are zeroed in on one of their core responsibilities: overseeing enterprise risk programs at large. While their agenda continues to grow and expand, key areas like cybersecurity and ERM remain a central focus.”

In contrast, topics like artificial intelligence governance (20%) and environmental, social and governance reporting (22%) are receiving less attention. 

Audit committee members see an opportunity for continuous learning and improvement tio improve their effectiveness. Only one-third of respondents say the committee is effective as is, while the rest believe there’s at least one strategy that could boost general effectiveness. Those respondents highlighted three key areas for improvement: increased discussion and/or engagement from members during meetings (29%); improved quality of pre-read materials (28%); and improved quality of presentations during meetings (26%).

“The effectiveness of an audit committee can be distinguished by how it executes its responsibilities,” said Krista Parsons, audit and assurance managing director at Deloitte’s Center for Board Effectiveness, in a statement. “Key to this is including the right topics on the agenda, obtaining information that enhances comprehension of these issues, and fostering candid and transparent discussions. These are among the actions that audit committee members can take to be prepared for the issues facing them today and in the future.”