BoardroomDirect®
Update on the current board issues: September 2014

September 2014
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BoardroomDirect®<br><span>Update on the current board issues: September 2014</span>

At a glance

Audit Committee Excellence Series: Overseeing external auditors addresses leading practices related to communications with the external auditor, the chair’s relationship with the lead audit partner and the firm, evaluating the external auditor’s performance, and the company’s preapproval controls for services provided by the external auditor.

Issue in focus

Audit Committee Excellence Series: Overseeing external auditors

PwC’s Center for Board Governance recently published the fourth in its Audit Committee Excellence Series, Achieving excellence: Overseeing external auditors. The publication addresses leading practices related to communications with the external auditor, the chair’s relationship with the lead audit partner and the firm, evaluating the external auditor’s performance, and the company’s preapproval controls for services provided by the external auditor. The publication also discusses third-party influencers that can have an impact on the committee.

Effective oversight of the external auditor is an important element of the financial reporting process. And today’s environment is one of heightened investor and regulator expectations. Audit committees recognize the importance of maximizing their relationship with their external auditors. The following are some of the actions the publication identifies to help audit committees achieve excellence:

  • Be familiar with the credentials of the leaders of the engagement teams at significant participating locations
  • Meet periodically with the lead audit partner outside of the typical meeting cycle and engage in meaningful dialogue
  • Get the most out of private sessions with the external auditor
  • Consider the relationship between internal audit and the external auditors, and how to maximize the value proposition of these two functions
  • At committee meetings, encourage dialogue that is not overly scripted

Read Achieving excellence: Overseeing external auditors edition. Visit the Audit Committee Excellence Series website for past editions on Forward-looking guidance practices and potential risks of consensus estimates, Financial reporting oversight, and Overseeing internal audit.