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A Statement by the CEOs of IFAC and The IIA

The global impact of the coronavirus COVID-19 is transforming the needs and expectations of stakeholder groups and creating radically new conditions in which organizations must think, plan, and operate. And, as organizations evolve to adapt to the “new normal,” so too must the structures and processes of governance that sustain them.

In periods of heightened and sustained uncertainty, the contribution of audit committees to governance is particularly important. Audit committees are established where appropriate as an extension of the oversight exercised by governing bodies to ensure integrity, transparency, and accountability. By providing independent scrutiny of internal and external audit and the finance and accounting function, the audit committee increases its ability to deliver credible and reliable information used as the basis for decision-making. This ensures senior management, the governing body, and external stakeholders receive objective assurance and insight on critical aspects of organizational activity, including risk management, performance, reporting risks and related controls, and other key management processes.

Risk arises from uncertainty. As recent events have made all too clear, external conditions can be volatile and impacts can be sudden and devastating. Audit committees must be able to prioritize and deal with new threats and vulnerabilities while continuing to monitor and address familiar risks. In responding to new and heightened risks in areas such as fraud, cybersecurity, health and safety, operations, solvency, and business continuity, care is needed to ensure the continuing integrity of the control environment as interim arrangements, work arounds, and other measures are being implemented. Audit committees must be vigilant, agile, disciplined, and engaged. That will allow them a timely and coherent understanding of the continuously evolving operating environment and exhibit confidence in their reporting, disclosures, and conformance with regulatory, legislative, and ethical expectations.

We call upon audit committees to anticipate and respond energetically to the conditions created by COVID-19 by considering these six recommendations designed to optimize their crucial role in governance, oversight, and long-term value creation. In many respects, these are not new expectations but represent principles of heightened significance for all organizations for the foreseeable future.