The survey shows that although these new challenges and considerations can be overwhelming at times, the committees agree on what’s important. The survey identified four key takeaways for European audit committees:
Helping to ensure the finance organization has the talent and skills to maintain high-quality financial reporting.
Nearly two-thirds of respondents reported that their committees are discussing how the finance organization’s talent, skills and leadership must evolve to support the organization’s analytics and strategic capabilities. Maintaining internal control over financial reporting as well as disclosure controls and procedures while ensuring the finance organization has the talent and resources to maintain quality financial reporting is reported to be the greatest challenge.
Regulatory compliance, a focused internal audit and cybersecurity are ranked as the top concerns.
Across Europe, cybersecurity ranked highest in terms of other top priorities on audit committee agendas. Talent and expertise in this area were also cited as critical challenges. In fact, gaps in managing cyber risk virtually doubles versus our survey in 2017 as it relates to organizational awareness and culture.
Few are confident that their company’s current enterprise risk management processes capture disruptive risks.
Slightly more than half of the audit committees describe their company’s risk management system as robust. However, only about a fifth think that their company adequately addresses disruptive risks, such as technological risks. Nonetheless, the survey also found that risk management is inspiring more confidence than two years ago, which indicates that relevant investments have been made.
Maximizing the role of internal audit’s value continues to be seen as a top priority by maintaining flexibility to adjust the audit plan in response to changing business and risk conditions.
Apart from a planning that specifically targets the company’s risks, the flexibility to adjust the audit planning to new risks at short notice is of the utmost importance. Of interest is that nearly a third of audit committee members feel that it would be a good idea to include environmental, social and governance (ESG) issues in the audit or make them the subject of a separate audit.