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 -- In an Age of Concern over Corporate Governance Issues,
 Study Commissioned by The Institute of Internal Auditors
 to Serve as "Survival Guide" for Boards of Directors --
 NEW YORK, Jan. 7 /PRNewswire/ -- A new study by Price Waterhouse, commissioned by the Institute of Internal Auditors Research Foundation, has revealed striking new information for understanding what practices are most effective in a well functioning audit committee.
 Titled "Improving Audit Committee Performance: What Works Best," the study outlines how to address the areas of greatest concern for audit committees today and also discusses where the most pressing future challenges are developing.
 Arthur L. Ruffing, Jr., Price Waterhouse's New York Regional Audit and Business Advisory Services Partner, who led the study, said, "In today's increasingly complicated financial reporting environment, with the ever-greater focus on an active and effective Board of Directors and on issues of corporate governance, a good audit committee is worth its weight in gold.
 "Still, we too often see audit committees which lack the resources, the information and the training to effectively do their job. Worse, audit committee membership is sometimes avoided by directors or is assigned only to the board's most junior members. In our study, we were determined to find ways to strengthen the functioning of the audit committee and to share this information with all of corporate America."
 In conducting the study, Price Waterhouse surveyed its own audit partners, directors of internal auditing around the world, chairmen of highly rated audit committees and leaders in thought in the area of corporate governance. Responses were received covering 424 companies in 11 countries. As a group, the audit committee chairmen surveyed served on more than 125 audit committees and 250 boards of directors, in a broad range of industries.
 Key findings included:
 -- The single most important finding was the audit committee's need for greater training and access to information. Even among the best audit committees, a high percentage expressed the need for greater training, including a formal training program for their members. Access to key members of management, and to independent and internal auditors, was also deemed essential.
 -- Audit committee independence is key to overseeing the company's financial integrity and protecting shareholders' interests. As a result, audit committee members should not be officers or employees of the company or its affiliates, not be affiliated with significant customers or suppliers and not be former officers or employees of the company within the past two years.
 -- Audit committees should periodically assess their performance, usually every three years. They should work with management, the director of internal auditing and the independent accountants, and review the results of their evaluation with the full board of directors.
 -- Audit committees should oversee the interim reporting process. Although this recommendation has been made by the Treadway Commission, as well as by similar committees in Canada and the U.K., less than half of audit committees oversee interim reporting.
 -- The annual report to shareholders should include a letter from the audit committee chairman. This recommendation, originally put forward by the Treadway Commission, would enhance audit committee performance by increasing its visibility and sense of responsibility. Nevertheless, only 18 percent of the audit committee chairmen surveyed currently followed this suggestion.
 "Looking to the future," Mr. Ruffing continued, "the study identified several new challenges that are developing, and which will increase the audit committee's responsibility. These are: international operations; joint ventures and partnerships; environmental matters; improved monitoring of management estimates; more involvement with internal controls, including reporting on the adequacy of those controls; greater involvement with computer related controls; increased attention to insurable risk management; interim reporting; increased scrutiny of regulatory and legal compliance; more involvement with budgets and forecasts; and additional audit committee training."
 Finally, the study includes an in-depth self assessment guide which allows audit committee chairmen to rate their own performance.
 "We are very pleased with the wealth of information we gleaned," concluded Mr. Ruffing. "This study provides very specific advice and a step-by-step method for an audit committee to enhance its performance. The enormous effort which went into this study, and the many months of preparation, should bear fruit for a long time to come."
 Copies of the study are now available through the Institute of Internal Auditors Research Foundation, 249 Maitland Ave., Altamonte Springs, Fla. 32701-4201. Copies of the study are $33 each.
 -0- 1/7/94
 /CONTACT: Dan Cohen of Price Waterhouse, 212-790-4710/

CO: Price Waterhouse ST: New York IN: FIN SU:

TW -- NY049 -- 0232 01/07/94 15:26 EST
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Publication:PR Newswire
Date:Jan 7, 1994

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