KPMG Audit Committee Guide

This 2021 edition of the KPMG Audit Committee Guide (the Guide) draws on insights from our interaction with thousands of audit committee members, audit and governance professionals, and business leaders across the country and around the world.

The Guide is intended to be a practical, user-friendly reference for both new and seasoned audit committee members, and for the management and audit teams who work with the audit committee. To that end, the Guide covers the fundamentals—e.g., basic requirements and responsibilities and key areas of oversight—and offers insights into the current challenges and leading practices shaping audit committee effectiveness today. It is written for the needs of companies listed on a U.S. stock exchange (NYSE or Nasdaq) and can also serve as a resource—to the extent applicable—for audit committee members of private companies, non-U.S. companies, and nonprofits.

Some of the issues covered in the Guide—e.g., risk oversight, cybersecurity and the impact of emerging technologies, long-term performance metrics, shareholder activism, and environmental, social, and governance (ESG) issues—are clearly matters that require the full board’s attention. These and other broader issues are included, however, as the audit committee may have an important role to play (if simply as a catalyst) in helping to ensure that key issues—particularly those related to risk and compliance—are being addressed appropriately.

Of course, no one size fits all; the practices discussed in this Guide should be considered in the context of each audit committee’s needs and circumstances to the extent applicable in the countries where the companies are located. In the appendices, we provide examples of various audit committee materials—including a sample audit committee charter, annual agenda calendar, and audit committee and auditor assessment tools—for consideration and tailoring as appropriate.

Maintaining the committee’s effectiveness requires strong leadership, prioritizing the committee agenda, monitoring its oversight processes, and periodically reassessing its skills and composition. The audit committee, in discussion with the full board, should also periodically reconsider whether its risk oversight responsibilities still make sense as the risk landscape evolves.

Our hope is that this Guide will serve as a resource for audit committees to continue to fine-tune their oversight and governance processes and drive robust conversations to deliver effective oversight as they help guide their companies forward.

Please contact your country's Partner in Charge of Board Governance Forum.