Insight

Initial meeting lead audit engagement partner

​Meeting with the lead audit engagement partner is a key component of any new AC member orientation program.

A meeting with the lead audit engagement partner is a key component of any orientation program for a new AC member and should occur early in the orientation process. In addition to obtaining the audit partner’s views on a number of critical company-wide issues—e.g., key risks facing the company, effectiveness of risk management processes, overall control environment, strains on the financial reporting system, caliber of the management team, tone and culture of the organization—the new AC member will expect to have an in-depth discussion with the audit partner about a number of specific financial reporting and internal control issues, including:

  • Most recent financial statement risk assessment, considering internal and external factors (economy, regulation, accounting standards, competition, etc.)
  • Critical accounting policies, i.e., those most sensitive to management’s estimating process (reserves, loss contingencies, impairment testing, etc.)
  • Prior-year internal control deficiencies and status of remediation efforts
  • Most recent year-end unadjusted audit differences reported to the AC and reasons for the differences (GAAP departures, assumptions used by management, hard errors, etc.)
  • Overall quality of the company’s accounting policies and reporting
  • Required communications for the most recent annual and subsequent interim periods
  • External auditor’s relationship with management and IA
  • External auditor’s relationship with the AC outside of regularly scheduled meetings (frequency of
  • interaction, accessibility, depth of discussions)
  • Quality of the finance organization (including locations outside of headquarters)
  • Quality of IA department (skill sets, experience, support of the annual audit)
  • Management’s approach when preparing to adopt new accounting standards
  • Scope of external audit, including approach to multi- and foreign-location components, and use of affiliated or other auditing resources
  • Use of audit reports on outsourced service providers
  • Use of company’s internal and external experts, such as actuaries, valuation experts, and others
  • Audit approach to consideration of fraud

Explore all topics in the Audit Committee Member Onboarding report


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