Audit committees: The dos and don’ts


Today’s business world is dynamic and by its nature it is characterised by risks. Consequently, audit committees are being expected to carry much more responsibilities than ever imagined. Risks involving financial reporting, internal controls, information security and compliance all require a well calculated and top notch approach to their management, and accordingly the audit committee is continuously being expected to help identify solutions to risks in all these areas.

Audit committee is also being asked to ensure that the organisation is implementing strategies that not only enable them to survive but excel as well. Thus the quality of the audit committee is definitely an enterprise risk factor in itself. This article has been inspired by the Institute of Internal Auditors Malawi (IIA Malawi) and aims at shading more light on how the public sector can ensure that an effective audit committee is in place; the factors that can affect the success of such Committees (setting the right tone at the top) which include; the extent to which government resource allocation affects the committee effectiveness. The article will also highlight the drawback associated with appointments of members based on political affiliations.

The IIA Audit Executive Center’s Knowledge Report 2009, “Audit Committee Trends and Activities” highlighted that, in the March 2009 survey of Chief Audit Executives (CAE); seven organizational characteristics which should be considered when determining the ideal number of audit committee members were listed —in order of importance. On number three (3) was the “extent of responsibilities and expertise assigned to the audit committee.” This emphatically links to the list of the competencies the audit committee needs — expertise, skill sets, perspectives, and personal attributes.


CAEs also highlighted the top three attributes audit committee members should demonstrate, these being; Inquisitiveness, outspokenness, and courageousness as echoed in the “Global public sector insight: Independent audit committees in the public sector organizations” June 2014. The report emphasized that, “in determining the composition of an audit committee, consideration of independence and personal attributes of members is critical.”

That is, simply having an audit committee in our public sector institutions is not enough –to enhance ideal performance – it must be independent, well informed – beyond induction, and have the ability to demonstrate vigour. IIA Malawi believes that the composition of the committee members should have diverse mix of skills and experience relevant to the organisation, more importantly, government should ensure that at least one of these committee members is well conversant with internal controls and risk management.

Leading publications continue to stress that it is important that adequate measures are put in place to ensure that the independence of these committee members is not compromised by factors such as political affiliations. It is for this reason that IIA Malawi would like to highlight that committee members should be encouraged to sign declarations of interest forms at every meeting. IIA Malawi further recommends that committee members’ independence should be subject to periodic assessment throughout their tenure of office.


Furthermore, since all audit committee members must be members of the board, the critical success factor lies in the identification of well qualified and experienced individuals for appointments. In line with leading practices, IIA Malawi believes that for audit committee to be effective, government should operate a transparent and competent selection process. Precisely, IIA Malawi strongly believes that the positions should be advertised and individuals should apply and undergo interview process conducted by a nomination committee in selecting new members and where possible a reputable executive search firm can be engaged to facilitate the process.

This view is supported worldwide by professionals as evidence suggests that when operating effectively, the audit committee can ensure that appropriate and adequately designed controls are in place. Having achieved that feat, it should be able to objectively assess those controls and the related compliance concerns. Finally, IIA Malawi believes that the success of these committees depends on government allocating adequate resources for the committees to meet at least on a quarterly basis.

In conclusion, it is seen that an audit committee can and should do much more in enhancing organization values, having a committee that is empowered with resources to facilitate regular meetings and expertise deemed necessary to perform their work effectively is key to success. Certainly, necessity is raid upon audit committee members to possess, the inquisitive mindset (ability to ask pertinent questions and be able to evaluate the answers given), courage, and knowledge of the business environment the public institution operate in. IIA Malawi strongly believes that having appointed audit committee in line with the highlighted world class views — should enhance governance and operations in government whilst positively influencing an increasingly skeptical public.

*The author is a CPE Committee member of the Board of the Institute of Internal Auditors Malawi.

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