Audit Committees Should Lead by Example


The authors of “ Eight Habits of Highly Effective Audit Committees ” (Sept. 07, page 46) have identified relevant recommendations. However, these recommendations are for an audit committee that is a new body in the governance of a company or one in a company where formerly the audit committee merely listened to the CEO and hastily determined that “all is fine,” as seemed to be the style at Enron, for example. These are recommendations at the beginning stage of an audit committee’s life.

Audit committees should function at varying stages of performance—in the same manner as does a manager in relation to new employees, a president in relation to senior executive vice presidents, a nation in relation to its neighbor nations. As reliable evidence of quality performance persists, oversight responsibilities are reduced. I was reminded of this when I read one sentence in the article—a potentially powerful one: “Members of the audit committee are role models.” By its performance, the audit committee may elevate performance throughout the company and, therefore, change the nature of the committee’s oversight strategies.

I would like to see the insightful authors explore the observations, the reports, the insight from conversations with management that are critical for a reliable judgment of executive leadership quality. What evidence gives an audit committee—as well as the board—assurance that executive leadership has reached a level of consistent behavior that trust is warranted?

Effective, wise oversight leads to less need for such oversight, not more. Wise parents, wise supervisors, wise company heads implement this simple observation. While it appears somewhat Utopian, it is attainable for an audit committee, too.

Mary Ellen Oliverio, CPA
New York City


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.