Top 8 Questions Audit Committees Should Ask Accounting
Audit Committees can sometimes have a tumultuous relationship with Accounting management, especially when there are significant changes to operations, policies, or procedures that go unnoticed by the Audit Committees. If your Audit Committee is to provide adequate oversight for your company’s financial reporting system, it can be more efficient in its responsibilities by developing a solid internal control system. Before you can properly assess your company’s practice and internal controls, as well as, the opinions of outside auditors it is necessary to ensure you are asking the right questions of your accounting practice. Here are the top 10 questions audit committees should ask accounting management.
Are there areas of the business with excessive exposure to financial risk?
This can be due to the nature of the business or a specific unit or it could be due to an unusually high volume of business. As an audit committee, your team needs to know about these areas that may require special attention.
How does the organization reduce the risk of fraud in its financial reporting?
This question can be ultra-effective in discovering if the organization needs the additional implementation of internal controls. It may also point to the fact that your employees need increased awareness concerning fraudulent financial reporting.
Does Accounting Management have what it needs to properly assess the effectiveness of internal controls?
Depending on the relationship with your board of directors and the accounting team, this could be a good question to lead the conversation with or to end with. Letting management know that you want to be an advocate for their internal control policies can help avoid an adversarial type of relationship.
Is the organization planning on changing its accounting methods?
Obviously, a move to a different accounting method requires research, planning, and department-wide buy-in.
Are risk management programs in place that identify, address, and evaluate risks?
Having a strategic process for evaluating risks let the audit committee know how much guidance is needed in the risk management realm. If not, a strategic process should be implemented that matches the sophistication of the organization.
What are the main risks and are we prepared to deal with them?
Even with an operational plan to deal with risk, all organization must deal with it. Additionally, the answer to this question will strengthen its understanding of the business and the threats it faces.
Have there been any significant operational changes this year?
Any changes to operations need new risk oversight and the time to discuss if updated internal controls should be implemented.
Are there any tax or legal issues that the audit committee is unaware of?
Again, this question may seem like a “no-brainer”, but there can be certain scenarios, even serious threats, that fly under the radar of the audit committee.
Assurance and Risk Aversion through Baird Audit Group Services
This list of question that audit committees should ask accountant management is, of course, just a list of question an audit committee MUST ask but should be a solid beginning to allowing your audit committee to fully grasp the risks that an organization faces. Additionally, the dialog between an audit committee and accounting management is a completely different conversation than when an audit committee engages an internal or external auditor. For external auditing services, The Baird Audit Group does not just perform audits but is committed to offering you a wide range of services related to assurance and risk aversion. Contact us today online or at 706.855.9500 to discuss how we can help your organization.