'Audit committees to play more crucial role'

The Sri Lanka Institute of Directors together with KPMG Ford, Rhodes, Thornton and Co. recently held a panel discussion on the topic of Exploring Audit Committee Effectiveness.

The event included presentations from several prominent industry professionals including the keynote speaker Sammy Medora, a founding Partner of KPMG in India and the Chairman of KPMG's Audit Committee Institute and panellists Nihal Fonseka, Chairman of the Colombo Stock Exchange, Ronnie Peiris, Group Finance Director John Keells Holdings PLC, Channa de Silva, Director General Securities and Exchange Commission, Reyaz Mihular, Partner and Head of Advisory of KPMG Sri Lanka and Ms. Marina Tharmaratnam, President, Sri Lanka Institute of Directors.

The panel discussion included a multi perspective view of the role and expectations from audit committees as perceived by CEOs, CFOs, directors, regulators, external auditors and audit committee members.

Many participants said that the audit committee is expected to play an even more crucial role in a present day business context but were unsure about how effective current practices were in many companies which appeared to have areas for further improvement.

Audit committee, members were perceived to play a role of balancing risk and control and also emphasis was placed on the importance of having industry focused professionals in audit committee positions.

The Keynote speaker Sammy Medora emphasised the importance of the audit committee which should act as a sounding board taking more of an advisory role and supporting strategic management without getting involved in operational activities.

Close interactions with internal parties such as the Chief Executive and Chief Financial Officer and external auditors were seen to be crucial for strengthening audit committee effectiveness.

Medora said that like many developed nations whistle blowing could also be encouraged in Sri Lanka since this could be an effective mechanism for corporate level fraud detection and prevention.