For any new board member – particularly when joining the audit committee – a learning curve comes with the territory. Just how steep that learning curve is and how quickly a new director is able to contribute meaningfully to committee meetings, hinges directly on the quality of the induction and onboarding process.
Below, we discuss a number of things for new audit committee members to consider as part of an overall on-boarding framework, including:
Understanding the business – its operations, strategies, risks, and management team – as well as the responsibilities and culture of the board and its committees takes time. However, a structured induction program, including essential information and briefing materials, quality discussions with key people, and a “roadmap” for getting up to speed, can greatly accelerate a new member’s integration and contribution to the committee’s work.
For new audit committee members, onboarding presents an added layer of complexity as compared to board members in general, given the intricacy and scope of the financial reporting/accounting, legal/regulatory compliance, and risk oversight issues on the audit committee’s plate.
It is corporate governance best practice to offer a formal induction program for new members. The chair and/or company secretary should ensure that any induction program is tailored to suit the individual’s specific needs. So, while all directors will require induction into the organization itself, a director that is taking on their first audit committee role will need something different.
The audit committee chair should consider reviewing the induction program with the new member after several months to raise any questions they may still have and to improve the process for the next new member.
Even once a new committee member has been fully inducted, their development and education should still continue. Audit committee members should obtain ongoing professional development to ensure that they have the knowledge and skills to address the changing issues facing the company.
• Providing an information pack, including (at least) copies of latest financial reports and earnings releases, the committee’s terms of reference and recent meeting minutes, the internal and external audit plan, the risk register and any reporting on internal control effectiveness and relevant company policies, such as the code of conduct and the whistle-blowing policy
• Meetings with audit committee chair and other members to understand the role and expectations
• Meetings with the internal and external auditors to understand the audit risks and audit plans
• Meetings with management, including site visits, to discuss current audit and financial reporting issues as well as internal controls
• Meeting with the company secretary to understand the legal and regulatory specific and the status of any current litigations
Business leaders will also have important insights to offer on issues that are specific to their areas of focus and responsibility. In section 4, below, we identify possible issues to explore.
Meetings with management
Ongoing professional development
CIO and CISO (or equivalent role)
Chief Risk Officer (or equivalent role)
KPMG’s Board Leadership Center offers non-executive and executive board members and those working closely with them (including CROs and Heads of Internal Audit) a place within a community of board-level peers and access to topical seminars and ‘lunch and learn’ Board Academy sessions, invaluable resources and thought leadership, and lively and engaging networking opportunities.