The ‘Audit Committee Practices Report: Common Threads Across Audit Committees’, a joint effort between Deloitte’s Center for Board Effectiveness and the Center for Audit Quality (CAQ), identified cyber security and ERM as the top priorities in the next 12 months. A total of 266 respondents participated in a survey for this report, most of whom were from US public companies (74%), and of which 81% have more than $700 million in market cap.
Respondents cited cyber security as the top priority, with enterprise risk management (ERM) as the next priority.
Meanwhile, trending topics like artificial intelligence (AI) governance and environmental, social and governance (ESG) reporting are receiving less attention. Finance and internal audit talent (a new entry in this year’s survey), compliance with laws and regulations, and finance transformation rounded out the top five priorities.
Although the majority of respondents view internal audit as an effective function – one that adds demonstrable value – nearly 80% believe there is an opportunity for internal audit to add even more value.
Cyber security and the audit committee
Cyber security topped the list of audit committee priorities by nearly 20 percentage points over ERM. 69% of respondents highlighted cyber security as a top concern in the next 12 months, with 3-in-10 ranking it as the highest concern.
Notably, 58% of respondents said the audit committee has primary oversight over cyber security, with 25% indicating that the full board has oversight responsibility.
When considering what additional expertise would enhance the audit committee’s effectiveness, cyber security was highlighted as the top area (44%). This is particularly notable given that almost half (48%) of respondents said they have some level of cyber security expertise on the committee.
Opportunities for audit committees to increase effectiveness
With a growing agenda and evolving responsibilities, audit committee members see an opportunity for continuous learning and improvement and have perspectives on how they could enhance their effectiveness. Only one-third of respondents say the committee is effective as is, while the rest feel there is at least one strategy that could boost general effectiveness. Those respondents highlighted three key areas for improvement:
- Increased discussion and/or engagement from members during meetings – highlighted by 29% of respondents.
- Improved quality of pre-read materials — highlighted by 28% of respondents.
- Improved quality of presentations during meetings – highlighted by 26% of respondents.
