Audit Committee Responsibilities Questionnaire
Purpose of the Audit Committee:
The audit committee is a separately chartered committee of the board of directors. The audit committee has a direct relationship with the board of directors, as it reports to the board on a quarterly or more frequent basis on such things as audit
plans, audit findings and other items deemed to be significant. Generally, the audit committee’s purpose is to assist the board in overseeing the:
- Reliability of the entity’s financial statements and disclosures
- Effectiveness of the entity’s internal control and risk management systems
- Compliance with the entity’s code of business conduct and legal and regulatory requirements
- Independence, qualifications and performance of the external auditors
- Performance of the internal audit activity
The role of the audit committee has significantly expanded in recent years. Realizing this, the board of directors has begun to shift some of the audit committee’s responsibilities to separately chartered committees to create a balance of duties
and ensure they are effectively executed.
NO. AREAS OF RESPONSIBILITY YES NO NA COMMENT
A. Risk Management and Internal Controls
1 Does the audit committee address the following risk management and internal control topics?
a. The organization's risk management framework and key processes
b. How the risk management framework and key processes are linked to the company’s strategy
c. Key business risks
d. The organization's risk appetite
e. How risk management is coordinated across the organization
f. Amount of information about business risks that the entire board of directors needs to fulfill its governance obligations
g. Accuracy of risk management information received by the board
h. How to properly set the right “tone at the top” that reinforces the company’s values and promotes a “risk aware” culture
i. Management’s attitudes about controls
j. External auditor's opinion on the organization's system of internal control
k. Management's responsibility to obtain assessment of internal controls for outsourced accounting functions
l. Annual assessment of the organization's internal control environment
B. Finance and Accounting
1 Does the audit committee address the following finance and accounting topics?
a. Key financial reporting risks (typically those areas which require high levels of judgment, complex financial instruments, unusual transactions and changes to
accounting policies)
b. Adequacy of information regarding key financial reporting risks
c. Consistency of financial reports and disclosures with the operations and underlying performance
d. Critical accounting policies, how they are applied, and whether the choice of those accounting policies ensure that transactions reflect the economic reality
e. Adequate disclosure of significant transactions including related party transactions
f. Whether significant pressure is present to meet budgeted or expected targets
g. Key fraudulent financial reporting risks
h. Scope of work conducted by the external auditor
i. Awareness of changes to accounting standards, new (insert stock exchange) requirements, and changes in legislation that impact the financial reporting process
j. Significant fluctuations in the account balances and/or key ratios
h. Auditors' (external and internal) views on the overall quality of the company’s financial reporting process and whether it covers all key financial statement
issues and risks
i. Company processes and policies for communicating with institutional investors, analysts and brokers
k. Competency and experience of financial personnel
l. All related party transactions
C. Audit Resources and Process
1 Does the audit committee address the following internal audit topics?
a. Relationship between the audit committee and the internal audit function
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Audit Committee Responsibilities Questionnaire
NO. AREAS OF RESPONSIBILITY YES NO NA COMMENT
b. How internal audit should be resourced
c. How the internal audit plan is developed
d. Coordination between internal auditors and external auditors
e. Appropriateness of management’s responses to the internal audit reports
f. Adequate internal controls over the major risks
g. Appropriate management support for the internal audit function
2 Does the audit committee address the following during the audit planning process?
a. Meet with management, the internal auditor and the external auditor before and after year-end to discuss all significant items
b. Review and comment on the annual audit plan
c. Review the balance between internal and external audit work
d. Ensure a process is in place to follow up on audit recommendations
e. Investigate any matter brought to the committee’s attention
3 Does the audit committee address the following auditor performance topics?
a. Maintain a direct line of communication with internal and external auditors
b. Hold specific meeting with external auditors only and internal auditors only
c. Annually request management and committee member views on internal and external audit performance, effectiveness, objectivity and independence
d. Recommend the external auditor selection or reappointment to the board of directors/shareholders
e. Annually discuss with the external auditors any relationships or work with the organization that might impair independence
f. Review and recommend any personnel change for the chief audit executive position
4 Has the audit committee taken concrete steps to exercise its mandated responsibility to oversee the independent auditor?
Has the audit committee worked out the policies and procedures for approving non-audit services with sufficient clarity that management is able to proceed
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without having to exercise judgment as to whether a given non-audit service is "approved" or not?
a. Where does the audit committee stand with respect to compliance with the various legal and regulatory requirements?
b. Is the committee satisfied with company support and funding of the outside advisor it chooses to employ in meeting these requirements?
D. Audit Committee Performance and Operating Practices
1 Does the audit committee charter address the following (at a minimum)?
a. Background and experience requirements
b. Committee’s authority and specific responsibilities
c. Committee’s relationships/meetings with members of the management team, internal/external auditors and others
d. Frequency and general timing of meetings
2 Does the audit committee do the following when selecting and maintaining committee members?
a. Strive to maintain committee continuity
b. Recruit and maintain knowledgeable members (e.g., industry background, accounting knowledge, seniority)
c. Ensure new committee members are briefed on current and pending topics
d. Ensure committee members attend relevant ongoing training sessions (if needed)
3 Does the audit committee do the following when communicating with executive management?
a. Articulate the committee’s role and expectations
b. Assess management’s attitude toward the internal audit function
d. Maintain ongoing interaction with management and C-level executives
d. Develop information process for all relevant decisions, issues and topics
e. Report events/findings to other board members
4 Does the audit committee do the following with planning and conducting meetings?
a. Develop a meeting agenda, pre-read materials and other relevant documentation
b. Distribute meeting materials in time to review business and financial information and prepare audit committee meetings
c. Manage meeting agenda to assure all topics and opinions are discussed
d. Place an importance of regular meeting minutes
5 Does the audit committee do the following when assessing its own performance?
a. Receive informal feedback from the board, CEO, CFO and external auditors
b. Complete a self-assessment process
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Audit Committee Responsibilities Questionnaire
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c. Assess the contribution and performance of individual committee members
d. Evaluate how audit committee best practices relate to committee practices
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