The Audit Committee
Auditors and CFOs often present information about a company’s or not-for-profit’s operations, strategies, and risks to the Audit Committee or another oversight committee such as the finance committee. This information is often the basis for a recommendation and/or report to be delivered to the Board of Directors. Understanding the committee’s role and developing a relationship with the committee members will improve your communication effectiveness as well as help you stay focused on the most relevant information. And it will ultimately result in a more comprehensive report to the Board. Here’s how.
The audit committee
Audit committees act as gatekeepers over financial reporting. This means overseeing the accounting and financial reporting process.
In addition, the audit committee pays close attention to how a company manages risk and ensures compliance with relevant laws and regulations. The committee also evaluates whether the company’s control environment — including its internal and external audit processes — are effective.
Deliver clear and concise reports
The audit committee needs clear and concise reports and presentations that provide insight over raw data. To ensure your presentation resonates with committee members, research the members’ background, their professional and board experience and ask for advice from other executives who have experience presenting to the committee. This will help you figure out how much explanation is necessary to help the members understand your message.
Also, try to schedule time with the committee chair to establish a relationship and learn what matters the most to the committee. Time permitting, and with the approval of the chair, you can meet with each member of the committee to learn and address their concerns during your presentation. Knowing your audience will help you tailor your communication to their specific needs.
Focused attention
Use written materials, such as a written agenda and an engagement calendar highlighting key dates in the audit process, so the committee members can better understand and focus on what to expect in the process. Throughout your presentation, focus on the critical issues that require input from audit committee members and then welcome questions.
Written or verbal communication is to help committee members improve their understanding of the issues that fall within the scope of the committee’s responsibilities. To achieve this goal, provide sufficient detail to educate them. Anticipate the type of questions committee members might ask — and, if you receive a question you can’t answer with confidence, follow up later with a timely, relevant response.
It is considered best practice to have both an entrance conference with the committee, ahead of the audit, as well as exit conference where the audit results will be presented. At each of these meetings, offer the committee an opportunity for ‘Executive Session’ whereby the committee will have the opportunity for more open dialogue with the auditors
Immediately after your presentation, document what you learned, including individual committee member reactions and areas of interest. Doing so can help you prepare for the next presentation.
Team effort
An educated audit committee is an effective audit committee. Our team of auditors is experienced in communicating with audit committee members about financial reporting matters and internal controls. We also have extensive experience presenting financial reporting to the Board of Directors. If you’re unsure how to connect with members of your audit committee, we can help you tailor your communications. Contact Herzl Ginsburg, CPA, Audit and Accounting Services Senior Manager at 216-831-7171 by email here.
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