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Corporate governance: audit committee chairs concur on best practices.

In the post-Sarbanes-Oxley era, the audit committee has emerged as one of the most visible and important board committees; its role in identifying and managing risk has never been more critical to the company it serves, or under as much scrutiny. So says a new report by the Financial Officer practice of global executive search firm Spencer Stuart.

The report, "The Global 50: Perspectives of Leading Audit Committee Chairs 2005," invited audit committee chairs of 50 global companies to discuss the major challenges and issues faced by audit committees and the impact of heightened pressures and demands. The result is a document that examines how changing regulatory requirements have affected the functioning and composition of the audit committee, the committee's interaction with corporate management and advisers and committee recruitment. Based on consensus of those participating (which include audit committee chairs from BP plc, Comcast Corp., Dell Inc., Campbell Soup Co., Gannett Co., JPMorgan Chase & Co., Unilever N.V., Microsoft Corp., etc.), the report lists these best practices:

* Appreciate your responsibilities, not just to shareholders or the board, but to fellow committee members. Recruit value-added members to the committee who will be helpful immediately and hold each other accountable for continually raising the bar.

* Even as you juggle the myriad new regulatory requirements, do not lose sight of the big picture. Keep an open mind. Be flexible.

* Establish stretch, but realistic goals within the committee's charter and create a framework to achieve them. Each year, create an agenda to explore specific areas and maintain the discipline to address these areas throughout the year.

* Maintain an ongoing dialogue with all committee members, internal audit and external auditors between meetings. Use one-on-one sessions to clarify critical issues and establish agendas for upcoming committee meetings.

* Create an atmosphere in which committee members feel free to come to you to raise questions.

* Foster a rapport among committee members and strong working relationships with management and outside auditors. Teamwork is critical. Respect the unique perspective that each audit committee member brings, or find a replacement.

* Schedule and maintain tight agendas. Presentations should be provided electronically to committee members at least 72 hours prior to meetings to allow a thorough review. Focus meeting time on robust discussions of critical issues, comparable benchmarks and follow-up items, rather than a review of background materials.

* Stay current on new regulations, pronouncements and interpretations. Bring in experts on key issues, inviting the full board, as appropriate.

* Pursue the role with uncompromising passion and rigor.
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Article Details
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Title Annotation:Regulatory compliance managing methods
Author:Heffes, Ellen M.
Publication:Financial Executive
Geographic Code:1USA
Date:Jul 1, 2005
Words:413
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