Experts task audit committees on efficient risk management, governance

To entrench a high level of corporate governance among listed firms, audit committee members have been urged to work with the internal audit department in identifying risks that pose the greatest threat to a company’s reputation, strategy and operations, as well as help ensure that such risks are mitigated.

Besides, there is a need for the committee to ensure that cyber risk is specifically identified in the organisation’s overall risk management framework.

Partner and Head, Technology Assurance and CFO Advisory, KPMG, Lawrence Amadi, while addressing shareholders at the KPMG Audit Committee Seminar in Lagos, said the role of audit committee in overseeing internal control remains an essential aspect of effective governance.

Speaking on the theme: ‘Role of Audit Committee in Digital, Cyber and Risk Management’, Amadi said the role of audit committee members have expanded beyond oversight of financial reporting, audit and compliance risks to include oversight of critical operational and technology risks and related controls, as well as a range of ESG risks.

He pointed out that the committee is expected to monitor and ensure that technological performance and accurate reporting are evaluated systematically while the board receives regular reporting to improve digital, cybersecurity and risk management.

He stated that continuous education is needed to enable them to embrace the dynamics of digitisation, keep abreast of changes in the industry and stay ahead of trends.

According to him, they should also ensure that the risk oversight function is well-defined and effective in response to the constantly changing risk landscape of the dynamic business environment.
“Cybersecurity has emerged as a critical risk management component because of the rising interconnectivity, exposure and use of transformative technologies in businesses.
“The audit committee should monitor whether internal and external resources with the right expertise have been devoted to projects and ensure that compliance is reinforced at all levels with understanding on how the organisation is prepared in the event of cyber incidence.”

Amadi noted that emerging technologies could enhance efficiency and financial reporting, but added that the audit committee must oversee risk management and ensure alignment with company strategy to enhance efficiency.

Also speaking at the event, Partner in FSP of KPMG, Osame Omolaja, said there is a need to reinforce audit committee quality and set expectations for communication with the external auditors.

He pointed out the committee should also focus more on issues around internal controls, reporting, disclosures and information technology in the discharge of duties in their respective institutions.