Dealing with a heavy audit committee agenda: follow the 80/20 rule, understand that you can't do it all at the formal meetings, and more advice for agenda management.

• Author: Whalen, Dennis T.
• Position: ON THE GOVERNANCE AGENDA

Short of a crisis, the issues on the audit committee's radar don't change dramatically from year to year (and they probably shouldn't); but sometimes small shifts tell a big story.

In our 2015 Global Audit Committee Survey, it comes as little surprise to see all four top concerns carried over from last year: economic and political uncertainty and volatility, regulation and public policy initiatives, legal/regulatory compliance, and operational risk. Clearly, a slowing global economy, the flare-up of geopolitical hotspots, and the proliferation of major cyber breaches have intensified the spotlight on these issues. But for many audit committees today, these headline risks are also driving a slower-moving--yet critically important--trend potentially impacting the audit committee's effectiveness: agenda overload.

Audit committee members, by and large, continue to express confidence in their oversight of the company's financial reporting and audit quality. But the increasing complexity of the business and risk environment is stretching and straining many audit committee agendas with new or more-challenging risks to oversee in the areas of compliance, IT, cybersecurity, and more. Of the 1,500 audit committee members responding to our global survey, three out of four said the time required to carry out their responsibilities has increased, and half said it is increasingly difficult for the audit committee to effectively oversee the range of risks on its agenda.

In a positive development, more boards are reallocating risk oversight responsibilities among their committees and the full board--which bodes well for audit committees. But heavy agendas are probably here to stay. In addition to reassessing their responsibilities for risk, what more can audit committees do to tackle their heavy agendas? Here are a few suggestions we're hearing from audit committee members:

* It's the 80-20 rule: Focus on those few things with the greatest impact. The audit committee needs to determine what really matters and make sure the committee focuses on those issues and devotes the proper time and attention to them. If you try to do everything equally, you will get overwhelmed. Clearly, financial reporting and related internal control risks is job No. 1 for the audit committee; however, to address these issues efficiently (and free up time for more substantive issues facing the business), the audit committee needs to develop a high...