Audit Committee and Corporate Governance

The European Confederation of Institutes of Internal Auditing (ECIIA)

• Founded in 1982

• Confederation of 32 countries

• Management Board from 8 countries

• No individual members only countries• Representing approx. 30,000 internal auditors

ECIIA Purpose

• To represent internal audit to European Union and any other European institutions of influence

• To promote the profession within the wider geographic area of Europe and the Mediterranean basin

Monitor the effectiveness of the company’s:- internal control,- internal audit where applicable- risk management systems

• Very broad assignment from risk identification to risk management and check of the efficiency of the internal control procedures

• Control organisation is complex

Board

Management AC

Centralized control Functions

IA

Field

How can the audit committee achieve its reinforced role ?

• The Audit Committee is ideally placed– It has free access to any individual, information, data– It can ask for external resources with management

agreement

• But :– It has limited member resources and time– It is very difficult to encompass a very large

organisation

What are some of the ingredients to be successful ? (1/2)• Build an Audit Committee with the right profiles

(skills & behaviours) and good understanding of the business

• Develop a strong interaction with Internal Audit• Review carefully the company risk mapping and

risk assessment• Get a sense of the risk culture in the field• Discuss with management out of formal

committees

What are some of the ingredients to be successful ? (2/2)• Be flexible – a yearly approach is out of date• Require well structured information from the

company• Build a network of Audit Committees in large

organisation to be closer to the business• Think in term of system, view all the risk

stakeholders as a combination

Key points

• Quality of individuals• Company culture• Internal audit link• Control system

A challenging new posture for Audit Committees