Audit Committees
Boards of directors and audit committees are responsible for oversight of the business and the control environment critical in the fight against fraud. How can the audit committee structure the external and internal auditor engagement, and internal controls over financial reporting to mitigate fraud risk? The Anti-Fraud Collaboration plays an instrumental thought leadership role in helping the audit committee identify risk areas by advancing the understanding of causes and conditions that contribute to fraud.
Acute and careful oversight of the financial reporting process, enforced by controls set by public company management and in compliance with regulatory guidelines, help audit committees detect and deter fraud. Of course, today more than ever we understand that non-GAAP financial measures are also worth exploring, which is why we issued a report outlining the role of the audit committee in highly subjective and complex accounting areas.
Since the audit committee has direct reporting lines to company management, the internal auditor, and the external auditor, they are a hub for critical communications that effectively detect and deter fraud. In our webcast series, we examine how this centralized function can help make organizations more fraud resistant.
Boards and audit committees should ask questions of management, internal auditors, and external auditors to elicit indications of potential concerns related to incentives or opportunities for financial reporting fraud. They should have executive sessions with their internal audit staff, as well as the external auditor, even in the absence of special concerns or significant issues. These are just some of the many suggestions relevant to audit committees highlighted in our exploration of skepticism.
A Unique Position to Assess How Culture Impacts Fraud Risk
The audit committee of the board is well positioned to own the oversight of culture, given its role in overseeing financial reporting, internal audit, and other compliance functions. The Anti-Fraud Collaboration outlines ways to enhance board oversight of culture while also providing guidance on assessing the culture of the board itself.
The Role of the Audit Committee in Risk Mitigation
Misconduct by employees can potentially destroy an organization. Although management typically implements a variety of processes to identify misconduct, the audit committee can also play a role in mitigating these risks by asking key questions and maintaining 360-degree supervision of an issue during the audit process. The Anti-Fraud Collaboration outlines these and other ways audit committees can address fraud risk.
Skepticism is Vital to an Audit Committee’s Responsibilities
Boards and audit committees have ultimate responsibility for reviewing the information with a skeptical eye. They should question and probe information they receive to understand key risk areas and how management addresses them. The Anti-Fraud Collaboration shares tips to help audit committees promote a culture of skepticism.
Leveraging Emerging Technology for a 360-degree View
As technology evolves, audit committees can embrace improved abilities to review wide-scale reporting. The Anti-Fraud Collaboration is committed to sharing insights and thought-leadership around the application of emerging technologies and how they can support audit committees in their effort to maintain a 360-degree view of potential fraud risks at their organizations.
Culture
A Unique Position to Assess How Culture Impacts Fraud Risk
The audit committee of the board is well positioned to own the oversight of culture, given its role in overseeing financial reporting, internal audit, and other compliance functions. The Anti-Fraud Collaboration outlines ways to enhance board oversight of culture while also providing guidance on assessing the culture of the board itself.
Risk
The Role of the Audit Committee in Risk Mitigation
Misconduct by employees can potentially destroy an organization. Although management typically implements a variety of processes to identify misconduct, the audit committee can also play a role in mitigating these risks by asking key questions and maintaining 360-degree supervision of an issue during the audit process. The Anti-Fraud Collaboration outlines these and other ways audit committees can address fraud risk.
Skepticism
Skepticism is Vital to an Audit Committee’s Responsibilities
Boards and audit committees have ultimate responsibility for reviewing the information with a skeptical eye. They should question and probe information they receive to understand key risk areas and how management addresses them. The Anti-Fraud Collaboration shares tips to help audit committees promote a culture of skepticism.
Technology
Leveraging Emerging Technology for a 360-degree View
As technology evolves, audit committees can embrace improved abilities to review wide-scale reporting. The Anti-Fraud Collaboration is committed to sharing insights and thought-leadership around the application of emerging technologies and how they can support audit committees in their effort to maintain a 360-degree view of potential fraud risks at their organizations.
