Audit Committees Urged to Ensure Effective Oversight Function

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By Peter Uzoho

Professional financial services and advisory firm, KPMG has advised members of the audit committee of organisations to be more effective in carrying out their oversight functions on their organisations’
financial reports.
Speaking at the KPMG Audit Committee Seminar for Shareholders in
Lagos, 
the Partner, Audit Services, KPMG, Nneka Eluma, said audit committee members should ensure that financial statements show
accurately
, companies’ affairs and financial position.

Eluma while discussing the topic: “Analysis and Interpretation of Financial Statements Including Regulatory Updates,” stated that for
the committee members to be able to discharge such critical functions
effectively, they need to have deep understanding of the business of
the company.
“
If they will understand the business, they will then understand the contents of the financial report and then ask exciting questions on them,” Eluma said.
She 
explained that a company’s financial statements has five main components
which include statements of financial position, notes to financial statements, statements of cash flow, statements of profit or loss and
comprehensive income and statement of changes in equity.
Also contributing, another Partner at the KPMG Audit Services, Mr. Ayo
Soyinka said that audit committee members should ascertain whether the
accounting and reporting policies of the company are in accordance
with legal requirements and agreed ethical practices.

“Review relevant regulatory returns filed and disclosures made by the company; review companies’ semi-annual and annual financial
statements,” Soyinka said.
Soyinka who spoke on “Corporate Governance Roles and Responsibilities of the Audit Committee
,” urged the committees to have their meetings
regularly as required by their roles and responsibilities.
“It is recommended there shall be no fewer than three meetings during the year, held to coincide with key dates within the financial reporting and audit cycle
,” he added.
He outlined the agenda of the audit committee meetings to include evaluation of the internal and independent audit process; 
assessing
processes relating to control environment; oversee financial reporting; risk management and compliance, among others.
Soyinka listed the top 10 risks confronting companies which audit committee members should look into.

They include: long term value creation and the company’s role in the society, connecting strategy and risk, innovation, talent management and inclusion. Others according him are cyber security, boardroom composition, corporate culture, shareholder engagement, and regulation.
He also drew the audit committee’s attention to its action plan for 2018 which comprised: staying focused on their fundamental functions; monitoring implementation of new standards, impacts of business and regulatory environment, among others.