Calm in the storm: Audit committees remain resilient in a volatile world
The role of the audit committee is expanding, and their expertise has never been more in need. We’re in a uniquely challenging business environment and the risks companies face are mounting. Organizations are fighting fires in every direction: Interest rates are rising, inflation is at rates not seen in decades and a recession is looming. This is compounded by geopolitical tensions, supply chain disruptions, a war for talent, new work models and impending ESG and cyber regulation.
In this environment it’s hard to stay fully informed of the issues, never mind manage for them. In this year’s Accelerate insights series, we examine some of the most pressing issues facing organizations and outline the questions audit committees should be asking.
New privacy laws on the horizon
The cyber threat landscape is ever evolving, and organizations are looking for their blind spots, including those posed by their value chain. Meanwhile, Canadian jurisdictions are rolling out new laws governing the protection and use of personal information, with others expected to follow suit. Audit committees will want to ensure management is putting in place the processes and controls to become compliant with this legislation and prepare for future regulations.
Divide between finance and operations teams exposing new risks
In the wake of the rapid digital transformation of the past few years, there is a risk that finance and operations are disconnected. This can lead to poor decision-making and a poor employee and customer experience. Governance will be key to maintaining the newly created data environment.
Mandatory ESG reporting is around the corner
ESG data is among the data that needs to be coordinated through this transformation. Mandatory ESG reporting requirements are on the horizon and organizations need to be sure they keep apprised of the changes and timelines for these regulations. They should begin treating ESG data as they do financial data―protecting it through the three lines of defense, ensuring it is subject to the same disclosure controls and procedures as financial data and seeking outside assurance. Audit committees will want to be sure the company is preparing to meet these regulatory requirements.
Feeling the heat on climate impacts
Physical impacts of climate risk on business is also garnering increased focus and may also see the implementation of compulsory reporting. Organizations will need to think holistically and seek to identify the direct and indirect effects of physical climate change across the value chain. Management, boards and audit committees need to understand how these can affect their operations―and their financial statements.
Talent attraction and retention takes centre stage
Of course, cybersecurity, digital transformation, ESG reporting and identifying physical climate risks all require unique skillsets, but finding and retaining the right talent continues to be a challenge. Organizations hoping to attract and retain the best talent will need to look at their hiring practices and their corporate purpose and culture. They’ll also need to develop a succession plan that allows them to retain and pass down institutional knowledge. Audit committees should ensure management is working to retain key people in the finance function and has a plan in place for knowledge transfer.
Economic volatility hampers growth
Organizations will be tackling these challenges against a background of unprecedented economic volatility. Decades-high inflation, rising interest rates, a coming recession and geopolitical and social forces are all buffeting companies. They’ll need to pay close attention to their debt structures and cash flow while drawing on the financial know-how of their audit committee to weather the storm and possibly even emerge stronger.
In the articles that follow, subject matter experts from across KPMG in Canada examine these issues and the way audit committees―whose role has been expanding in recent years―will be instrumental in helping organizations navigate them.
KPMG advisors can help you navigate the most pressing issues facing your organization in 2023
Explore the Accelerate series
Defending against cyberattacks starts with looking at an organization’s processes, controls and partners
Audit committee oversight across the value chain can help bolster cybersecurity
Audit committees need to ensure management has a plan to acquire skills and retain knowledge in the finance function
Audit committees need to ensure management has a plan to find skills and keep knowledge
Audit committees can play a key role in driving enterprise-wide digital transformation to break down siloes and align data, objectives and KPIs
Audit committees can help break down the digital siloes between finance and operations
As their role grows, audit committees have become valued advisors to boards and management as they navigate challenging times
Audit committees can contribute strong financial knowledge to managing economic volatility
Mandatory ESG disclosures are on the horizon and audit committees play a key role in helping organizations prepare
Audit committees will be instrumental in preparing for coming ESG reporting requirements
Connect with us
Stay up to date with what matters to you
Gain access to personalized content based on your interests by signing up today
Connect with us
- Find office locations kpmg.findOfficeLocations
- Social media @ KPMG kpmg.socialMedia