The business and risk environment has changed dramatically over the past year, with greater geopolitical instability, surging inflation, high interest rates, and unprecedented levels of disruption and uncertainty. Audit committees can expect their company’s financial reporting, compliance, risk, and internal control environment to be put to the test by an array of challenges – from global economic volatility and the wars in Ukraine and the Middle East to cybersecurity risks and ransomware attacks and preparations for climate and sustainability reporting requirements, which will require developing related internal controls and disclosure controls and procedures. This is compounded by uncertainty in the UK regulatory landscape and in particular the extent to which internal control frameworks will need to be strengthened, evidenced, and assured as a result of the on-going UK governance and audit reforms.
We often hear that audit committee and investor dialogue is infrequent with over three-quarters of FTSE350 audit committee chairs reporting that they engaged with investors less than once a year1. The audit committee’s oversight responsibilities are vital to investors and while the audit committee report is a valuable source of information, we believe direct conversations would be beneficial for both parties. Drawing on insights from our Board Leadership Centre, interactions with audit committees and business leaders, and the FRC’s Audit committees and assurance: conversation starters we’ve highlighted nine matters we believe audit committees should consider and have on their 2024 agendas along with areas investors may wish to probe.
