Ten 'to-do's' for audit committees.

• Position: BOARDS OF DIRECTORS

KPMG's Audit Committee Institute highlights top-of-mind issues for audit committees, which are excerpted here:

1 Regain control of the audit committee agenda.

The challenges of the economic crisis--access to capital, cash flow, counter-party risks, impairments, etc.--have dominated audit committee agendas. As signs of recovery emerge, take the opportunity to develop more focused (yet flexible) agendas, eying key financial reporting risks.

2 Understand the risks posed by cost reductions made in response to the economic crisis.

Boards and audit committees should ask whether the company's delivery model has been changed permanently, and whether a "cost-reduced" business model can be sustained. Did we cut too much? How quickly can we restore critical infrastructure--IT and sales force? How far have we extended the company through outsourcing and offshoring?

3 Focus closely on all financial communications.

Earnings releases and scripts for analyst calls often pose more issues than the 10-Qs because they contain important business information--which often does not come from the financial reporting system, is not audited and is not subject to internal controls. If not already done, reconsider the types of earnings guidance the company issues. Engage early-on in reviewing 2010 proxy disclosures, particularly new disclosures regarding risk, compensation and corporate governance. Understand the company's policy on using social media networks to reach investors and customers.

4 Continue monitoring fair value, impairments and management's assumptions underlying critical accounting estimates.

These issues, together with pension funding shortfalls and going-concern challenges, will continue to be a major area of focus for audit committees. At the same time, there are important new financial reporting developments--including changes in accounting for transfers of financial assets, revenue recognition and IFRS--that may require the committee's attention. Set aside time at each committee meeting for a deep dive into a specific financial reporting development impacting the company.

5 Rethink the audit committee's role in risk oversight--with an eye to narrowing the scope.

The tremendous focus on risk today--and the SEC's new rules requiring disclosures about the board's role in risk oversight--is an opportunity for the board to reassess the role of the audit committee (and the full board and the other standing committees) in overseeing risk.

Does the audit...