The European Confederation of Directors' Associations (ecoDA) has recently published new guidance on audit committees for European companies.
The guidance details each aspect of the audit committee's role and functions, as set out in the Statutory Audit Directive (Directive 2006/43/EC). It provides non-prescriptive guidelines to help audit committees to best comply with the Directive. The Directive was implemented in Ireland in 2010 by the European Communities (Statutory Audits) Regulations 2010
The Guidance covers the following:
- Composition of the audit committee – this includes commentary on what is "competence" in auditing and accounting and on role of the chairman;
- Audit committee procedures, including setting the agenda, frequency and timing of meetings, reporting to the board and audit committee assessment;
- Monitoring the financial reporting process, including critical accounting policies, judgements and estimates, and unusual and complex transactions;
- Monitoring the effectiveness of internal control and risk management systems, including fraud and whistle-blowing;
- Monitoring the effectiveness of internal audit;
- Monitoring the statutory audit;
- Audit independence and non-audit services;
- Appointment of the statutory auditor; and
- Exemptions within the Statutory Audit Directive.
The Guidance includes examples from various Member States on how they dealt with aspects of the Directive.
The Guidance is attached here.