Audits are important. They help you understand that everything is going smoothly, keep you in check, and ensure that the company isn’t going to end up in trouble if a government agency ends up auditing you. Understandably, as a current or aspiring controller, you often have to work with the audit committee in some form.
Controllers and the Audit Committee
From setting the agenda for meetings, leading the management presentation portion that discusses significant accounting, financial, and internal control issues, reviewing earnings releases; or responding to questions and comments related to forms 10-Q and 10-K prior to filing, the work you do with an audit committee varies by the size, scope, and business formation of the company.
As this is a vital part of corporate governance, risk management, and compliance, it also doesn’t hurt for you to develop a strong working relationship and decent rapport with the audit committee as well. As discussed in a recent Going Concern article on this relationship, TE Connectivity’s Controller Robert Ott finds that the audit committee isn’t only a necessary part of the business, but can provide necessary insights for the business—if you know what you’re asking.
“I enjoy interacting with the audit committee, and the committee is integral to our corporate governance,” said Robert Ott, CPA, senior vice president and corporate controller at TE Connectivity, a Switzerland-based manufacturer of connectivity and sensor products for harsh environments. “The audit committee is a very valuable resource for the management team, and we leverage their diverse experience in financial disclosures, internal control, compliance, and other matters.”
Tips for Building a Meaningful Connection with the Audit Committee
But how can you work to improve the relationship with the audit committee? The Going Concern Article noted the following tips:
- Open Lines of Dialogue Matter: Whether the news is good or bad, you can’t hide anything from the audit committee. Additionally, one of the most important things you can focus on is education. Committees need to know what kind of risks exist unique to the business, and the effectiveness of an audit committee hinges on it understanding the business
- Keep Your Top Level Executives in the Loop: Though you may have the freedom to set up open lines of dialogue with the committee, make sure you have approval from the CEO or CFO who may want to be kept in the loop. Ask first.
- Get face to face time: As with any relationship, professional or otherwise, making the most of your one-on-one time is extremely important. Show up to meetings early, find ways to communicate with committee members outside of the normal meetings, and try to set up real communication opportunities.
- Keep a schedule (in and out of meetings): Whether it’s the audit plan, pension assumptions, goodwill impairment testing, and cybersecurity and IT updates, it pays to develop a cadence in communication. For instance, it will work much better for you to send [x] update every July and [y] update every September than randomly sending notices throughout the year.
- Don’t Drop Last Minute Information: As we’ve said, a well-informed committee is an effective one, so if you’re sending materials the night before the meeting, the committee won’t have much time to read and comprehend the information. Sending this a week or so in advance will help to create more meaningful discussions.
- Take Accountability: When issues do arise, take ownership of troubleshooting the root cause and developing and communicating a plan to remediate the issue.
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