Help is at hand for audit and risk committees who are under increasing pressure to comply with a raft of transparency measures enacted by the European Union over the last five years.
ECIIA and the Federation of European Risk Management Associations (FERMA) have launched joint guidance – Audit and risk committees: news from EU legislation and best practices – designed to aid those committees cope with recent revisions to the 8th Company Law Directive. Those changes have affected such areas as gender diversity and remuneration.
The document provides advice on how risk and audit committees should support their boards and receive help from internal auditors and risk managers. It identifies ten possible responsibilities to share between audit and risk committees and is meant to help boards of companies and the chairmen of audit and risk committees to handle the increased EU requirements on financial and non-financial transparency.
“In this changing environment where regulatory and business burdens are increasing, it is important for each organisation to set up an efficient and integrated corporate governance model,” Thijs Smit, ECIIA President, says: “This guidance clarifies the role of each actor of the governance arena and should help all members of risk and audit committees.”
“Overall, the burden for audit committees is increasing and the knowledge requirements of their members is expanding,” FERMA President Julia Graham says. “There is a clear constraint on the time and resources of audit and risk committees when they set their agendas. The support of risk managers and internal auditors has become more relevant than ever to ensure meaningful and qualitative reporting.”
To facilitate the implementation of the more recent Directive on non-financial reporting adopted by the Council of the EU on 29 September 2014, European legislators have required the European Commission to adopt guidelines within the next two years on a methodology for reporting non-financial information.
“In addition to informing the board and senior executives about the best practices and the latest developments, our guidance is also meant to be a first step towards a positive dialogue with the Commission to build these guidelines,” says Graham.