The relationship between the chair of the audit committee and chief audit executive (CAE) is unique and valuable. However, while the Chartered IIA has traditionally offered plenty of support and guidance for CAEs, including regular articles in this magazine on how to make the most of the relationship and improve understanding of the internal audit function, there has been far less focused advice available to audit committee chairs and members.
This is why the Chartered IIA is establishing an Audit Committee Subscription service as a “one-stop-shop” where both existing and new audit committee members can get greater insight and information about the role of internal audit, the various important elements of corporate governance and, importantly, the information they need to challenge and question the CAE and ensure the organisation gets the most benefit from this relationship.
“When I took on my first audit committee role, I had been a head of internal audit for years, so knew what I should expect of the function and what I believed it should be doing, but most of the people I met on audit committees did not have this background and lacked the detail they needed to feel fully on top of their duties,” recalls Liz Sandwith, the Chartered IIA’s professional practices adviser.
New audit committee members are often given vast amounts of information about the organisation and the sector, but they are told far less about the governance structure and their responsibilities on the audit committee. This may be because it is assumed that they already know it, or because the people responsible for briefing them don’t know the details themselves. Usually, Sandwith says, people know enough to think they are fully informed, until they actually have to deal with the nitty gritty details and realise what they don’t know.
“The new service is intended to be a one-stop-shop about governance, internal audit, questions to ask internal audit, guidance on governance culture and structure – everything you need to feel confident that you understand the internal audit function and the audit committee’s role in governance,” she says. “We are intending to include a wide variety of contributors, a chat room where audit committee members can share experiences and ask for advice, and information about key governance developments, such as the BEIS white paper on audit reform.”
Tony Sweeney has helped to review the content for the new service. In addition to many years’ experience as a CAE, he has also served on, and chaired, a number of audit committees. He believes that new audit committee chairs (as well as many with more experience) need two types of information: sources of current and emerging best practice in internal audit and corporate governance, in order to make conscious, informed decisions to support them in fulfilling their responsibilities, and sources of good advice from internal audit practitioners.
“There’s a lot of information out there, but it takes time to sift through it all and dig out the parts that are relevant to your sector or geography,” he explains. “It would be hugely helpful to have one reliable resource that provides information and research on everything from cyber risk and the latest environmental, social and governance (ESG) changes, to developments in critical risks. Time is scarce and it can be hard to find trusted sources that are up to date.”
He sees a clear need for a trusted source where people can go for “the ten commandments of internal audit – all the basics in one place and a distillation of best practice”. Many people who are new to audit committees believe that the function of internal audit is to look primarily at financial risks, he adds. They don’t always fully appreciate all the operational, governance and professional risks even though the consequences of failure in these areas can lead to penalties for both the organisations and, increasingly, for the individuals themselves.
“A source of basic templates and aides’ memoirs for essential meetings and content are also useful,” he adds. “For example, the chair of the audit committee must do an annual effectiveness review so an updated best-practice template can help to ensure they don’t miss anything important.”
Jeremy Lawson, group internal audit manager at Persimmon Homes, believes that more CAEs should consider taking up roles on audit committees as part of their career progression. Any member of an audit committee should get value from this new service, he says. “The unique element that the Chartered IIA can add is a focus on the real value of internal audit and how audit committees can get the most from the relationship and the skills available to them.”
“We want this to be a safe space to discuss common issues, seek advice and ask questions,” Sandwith stresses. “It should be a chance to hear other audit committee voices and keep up with developing best practice to make the most of internal audit at all levels.”
Admission to the Chartered IIA’s Audit Committee Subscription service is £250 + VAT per year. Those interested in being involved or recommending a potential member should contact Liz Sandwith for more details.
This article was first published in May 2022.