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Wilcox Miller & Nelson: What to Look for in an Effective Audit Committee Chair
Audit committees today are faced with the heavy burden of regulatory mandates and growing investor expectations. One way to ensure the effectiveness of the audit committee is to have a strong chair. By choosing a strong leader for this essential role, your entire board will be able to have greater confidence that the audit committee is on top of the issues.
This article shared by Wilcox Miller & Nelson shares six attributes seen in strong audit committee chairs:
- Highly experienced: They need to have a good understanding of the business, its risks, and controls. They also know what topics to elevate to the full board, and when to do so.
- Professionally skeptical: They’re willing to provide an independent point of view and are intellectually curious. They will look for additional information when they aren’t happy with the answers they get from management.
- Possesses integrity and confidence: They promote a strong “tone at the top” for the company and for the committee. They also need to ensure that all elements of the charter are being addressed.
- Organized and proactive: They’re able to prioritize the most important items on the agenda. They’re good discussion facilitators and know when to cut off low-value discussions.
- Strong communication and interpersonal skills: They provide clear updates of issues to the full board. They’re not afraid to ask difficult questions and have uncomfortable conversations with members of management, service providers, and even other committee members.
- Willing to devote the time and energy: Strong chairs take the time to develop the agenda and effectively execute meetings. They also make themselves available to management and other board members. The time commitment of the audit committee chair goes well beyond just the meeting time dedicated to that committee, not to mention meetings of the full board.
Strong audit committee chairs understand that an effective audit committee means more than simply meeting stock exchange composition requirements. They recognize the importance of having a diverse committee made up of members with the right experience, expertise, and both hard and soft skills. They keep the committee refreshed and use the assessment process to ensure that all committee members are functioning effectively. Having a strong audit committee chair at the helm can help ensure that the audit committee not only keeps up but excels.