The Sri Lanka Institute of Directors recently organized a webinar moderated by Suren Rajakarier Partner, KPMG Sri Lanka to deliberate the responsibilities of audit committees during an economic crisis to update its members on the current thinking and trends from acknowledged leaders in the field.
KPMG Sri Lanka facilitates the Audit Committee forum for the SLID which brings together Audit Committee Members to discuss key issues and challenges in a way that is meaningful and relevant to them and helps them become more effective in their roles.
The keynote was delivered by Rachel Johnson Global Head of Risk Management and Corporate Governance for Policy & Insights at ACCA and Member, Accountancy Europe Corporate Policy and Member of the OECD Corporate Governance Committee.
The panel comprised Aruni Siriwardena Managing Partner, Advik Consulting, Shaktha Amaratunga Independent Non-Executive Director, Hemas and Carson Cumberbatch Groups and Lalith Withana Managing Director, Agility Consulting.
In her keynote, Johnson said, “Whilst many countries may not have had an economic collapse as perilous as in Sri Lanka, 2022 has thrown the whole world a curved ball starting with the war in Ukraine which has accelerated the risks that the pandemic raised.”
“Audit committees should be clear with themselves, the Board, and senior management oftheirduties during crises, how did they change, and how they plan to fulfil these expanding duties and evaluate whether they have the relevant subject matter expertise and whether the CEO, senior management and other major decision makers are the correct leaders that can help steer the organization through the current crisis.”
Answering a question from the moderator on how the audit committee can practically handle the wide-ranging types of risks including hyper-inflation during an economic crisis, Shaktha Amaratunga said, “There should be a risk management process which is owned by the CEO and the management team with oversight by Board with an agreedrisk matrix. Risks should be prioritized and assessed whether they are being effectively managed and whether the process captures the emerging risks as well.”
Lalith Withana said that it is important for Audit Committees to think out of the box and take a forward-looking approach. “These issues are taking place since audit committees are structured on a previous charter meeting every 3months and to whom risk reports to which in some companies is a risk committee reporting to the Board separatelyto the Board and in others a CRO reporting to the CEO but not the audit committee.”
Aruni Siriwardena said, “From a project management perspective, if we don’t meet the objectives and deadlines, every issue or risk that we face results in a financial impact to the organization or project at large. We bring in certain proactive measures to try to ensure that activities are categorized into urgent vs. important.”