Audit Committee Guidance for European Companies
This document is a practical tool for Audit Committees developed by the European Confederation of Directors' Associations (ecoDa), "the European voice of board directors". It was produced by a working group set up by ecoDa and chaired by Timothy Copnell, Associate Partner at KPMG.
Corporate governance standards are high on the agenda throughout Europe. The expectations of stakeholders have never been greater, and the scrutiny by regulators and investors never more stringent - and as a consequence, the role of the audit committee has rapidly increased in importance and expanded in scope. However, it was the Statutory Audit Directive (Directive 2006/43/EC), published by the European Commission in 2006, that set audit committees on the path to becoming a key feature of the corporate governance framework of all EU Member States.
This publication articulates the principles underlying the audit committee's role and aims to help steer organisations through the new requirements set out in the Statutory Audit Directive. Inso doing, it provides non-prescriptive guidance to help audit committees (and those who support them) gain a better understanding of the processes and practices that help create effective audit committees.
The composition of the audit committee is addressed in chapter one, while audit committee procedures - the procedures and practices that provide the support and structure necessary to discharge audit committee responsibilities - are looked at in chapter two. Chapters three to six focus on the duties of the audit committee - monitoring the financial reporting process; monitoring the effectiveness of internal control and risk management systems; monitoring the effectiveness of internal audit; and monitoring the statutory audit. Chapter seven addresses audit independence and non-audit services; and chapter 8 looks at the appointment of the auditor.