Setting the audit committee agenda: meeting financial challenges with smart, pointed solutions should be job one for any audit committee. Here are 10 recommendations to make sure the process goes as smoothly as possible and leaves less to chance.

• Author: Deloach, Jim
• Position: AUDIT COMMITTEES

It's a given that the world we live in today is vastly different from that of just one year ago, and it remains dynamic and challenging. This environment is causing boards of directors and their audit committees to confront numerous challenges, each of which should have a significant impact on the committee's agenda.

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Following are 10 audit committee mandates based on these challenges that have been identified through discussions with numerous audit committees and board members throughout the United States. These include enterprise-level and process and technology risk issues.

Enterprise-Level Mandates

* Keep the company's risk assessment evergreen. Using enterprise value as a context, the audit committee should focus on such questions as what are the "hard spots" and "soft spots" in the business plan; what keeps management up at night; do we know what we don't know; are there any risks requiring additional information or perspectives; and how do changes in the operating environment affect the critical assumptions underlying our corporate strategy?

A risk assessment is much more than a list of risks. The focus should be on creating transparency around the company's most critical risk exposures, identifying changes in the operating environment and understanding how those changes impact the business. As a result, other standing committees of the board, as well as the full board itself, will have an interest in the risk assessment results--particularly when those results are evaluated in the context of the corporate strategy. This emphasis is highly relevant to the board's risk oversight process.

* Assess the capability and succession planning for the finance organization. The finance organization performs many activities directly under the oversight of the audit committee.

Accordingly, given the changes taking place in many organizations over the past 12-to-18 months, the audit committee should satisfy itself that the skill sets available in finance match expectations. As the changing demographics of an aging workforce have loomed large, succession is another area of inquiry.

The committee should ensure that the finance organization has personnel in place and in the wings who understand the organization's industry, structure, culture, performance issues and internal and public reporting requirements. As retention is an obvious priority, developing people and promotion from within should be emphasized whenever possible.

Also, it is important to look for opportunities to hire financial talent at lower levels. In addition, external...