Audit committees are recognised as the cornerstone of a successful and credible financial reporting system and both the demands placed on them and the expectations of them continue to increase exponentially.
This challenging environment is creating a significant shift in audit committee behavior. New rules governing audit committee practices have added new responsibilities to their mandates in place of several traditional or "old" audit committee practices of the past. How effectively an audit committee fulfills these new responsibilities, and well it meets the ever increasing expectations being placed on it will depend upon whether the audit committee also embraces new behaviors, which go beyond compliance with the new requirements.
Most audit committees have responded quickly and positively to the increasing expectations of investors and regulators. While some audit committees had their shortcomings in the past, such weaknesses are no longer regarded benignly. Indeed, even those audit committees that had been discharging their duties and responsibilities diligently are under much greater scrutiny than before. With so much more being demanded of all audit committees, there is no longer a tolerance for anything less than the highest degree of diligence.