Audit committees are key to public confidence in a company’s financial reporting. The responsibilities of audit committees and importance of their composition and involvement was reinforced in 2014 by the Audit Regulation and Amending Directive.
On 12 September 2019, the Quoted Companies Alliance (QCA) published its new and updated Audit Committee Guide, which replaces the November 2014 version. The Guide is intended to assist audit committee members and audit committee chairs in their roles and sits alongside the QCA Corporate Governance Code.
Key changes to the Guide from the 2014 version include:
- The roles and responsibilities of the audit committee, its chair, the finance director and company secretary have been expanded. The guide also states that the company secretary should not be a member of the committee nor, unless impractical, the finance director.
- The risk management and internal control section of the Guide has been significantly extended. For example, it recognises the dynamic and evolving risk landscape and the need for companies to consider the risks of their extended business. It also encourages companies to monitor any threats and opportunities and their potential impact.
- The Guide includes additional guidance relating to new accounting policies, the payment of dividends and the audit opinion.
- Additional features of the audit committee report have been added, including information regarding auditor rotation, tendering, risk and control framework and the internal assurance or audit function.
- Appendix A of the Guide includes additional agenda items for month six of the financial year, relating to approving audit fees and non-audit service provision policy.
Members of the QCA can download the new guide from the QCA website for free: https://www.theqca.com/news/briefs/189376/new-qca-audit-committee-guide-published.thtml.