Audit Committee 101: From the Basics to Leading Practices

Being an audit committee member has never been harder. Members face public scrutiny, regulatory oversight, and legal exposure. Shareholder activism and regulatory interventions are forcing directors to go well beyond the common law conventions aimed to direct directors to execute their duties with adequate 'duty of care' and 'duty of loyalty.'

Ideally, all audit committee members should be either a financial expert, or at least financial literate. The ability to read and understand financial statements should not be taken for granted as the complexity of U.S. GAAP goes far beyond the accounting fundamentals of debits and credits. Prospective audit committee members should be tested in terms of their accounting knowledge and related internal controls, especially anti-fraud controls. This training will help enhance this understanding by exploring what audit committee members should know. Topics include:

• Principal audit committee functions and the written charter
• The importance of 'independence' – audit committee members and auditors
• The basics of objectives, risks and controls – especially entity-level controls
• Understanding the higher risks associated with U.S. GAAP and regulatory disclosures
• Engaging the external auditors and the reporting relationship
• Planning and overseeing the external audit contract, including communication per SAS 114
• Understanding the differences between a deficiency, significant deficiency and material weakness
• Reporting relationship with the internal audit function
• Oversight of legal compliance and the reporting relationship of general counsel
• Audit committee and board intelligence for decision making purposes
• Anti-fraud controls at the board level