The Canadian Institute of Chartered Accountants is releasing the first post-Enron guide for audit committees, management and auditors.
Co-authored by Jim Goodfellow, FCA, partner, Deloitte & Touche and Maureen Sabia, a lawyer, corporate director and audit committee chair, Integrity in the Spotlight: Opportunities for Audit Committees is intended to be the authoritative, “how to” textbook for making the transition from the traditional audit committee to the new audit committee demanded by investors today.
“The onus is now on boards of directors, auditors and audit committees to seize the opportunities that have been presented to them and enhance the quality and effectiveness of their oversight,” said Sabia in a news release.
The fundamental thesis behind the ideas and techniques in the book is that more effective audit committees are all about oversight, and establishing and managing clear and strong relationships among the board, the audit committee, management and the external auditor. The book stresses that managing these relationships takes leadership, time, effort, courage, persistence and diplomacy.
“One of the key dimensions of audit committee responsibility is oversight of the external auditor,” said Goodfellow. “There is now recognition and acceptance of the fact that the external auditor works for and is accountable to the audit committee and board of directors as representatives of the shareholders. Understanding how this new accountability relationship enables audit committees and external auditors to work together more effectively is very important for all parties involved in the corporate reporting process.”
The book provides a framework for enhancing audit committee effectiveness, including how to develop a charter setting out their responsibilities; and, it includes guidance on how to deal with tough issues and probe for information from management and auditors.
“Integrity in the Spotlight is a comprehensive, no-nonsense, guide to audit committee best practices,” said David Smith, FCA, president and CEO of the CICA. “It squarely takes on ethical and moral dilemmas audit committees may face from time to time, and then clearly explains the concepts, reasoning and steps it takes to get to the right answer.”
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