If the company maintains a disclosure committee, understand how it functions and who attends the meetings. But recent focus and interpretive guidance by the SEC staff warrant additional focus to ensure management’s use of non-GAAP measures is appropriate. In particular, audit committees should ensure that both positive and negative adjustments are included. Transparent disclosure of non-GAAP measures can be useful to investors. Pay attention to “special items” and non-GAAP measures - particularly in the earnings release. Request schedules quantifying the impact of both unusual transactions and significant changes in estimates impacting the current period. Consider having management highlight these areas within the draft filing document(s) as well. Have management prepare a summary memo highlighting areas of change (e.g., risk factors, disclosures, accounting policies, new events and developments) from the prior period. As with the functions listed in Table 2, these roles could be audited.Ask management for help in better understanding what has changed in the current filing. In addition to the functions in Table 2, oversight bodies can play other important roles, including facilitating continuous improvement, setting the tone at the top, communicating key decisions, and indicating the preferred behaviour and values (through a code of conduct) that are to be adopted and demonstrated by an organization’s personnel. Taking actions to correct an observed deficiency once its cause has been identified, either directly, by adopting a new rule or policy or amending an existing one, or indirectly, by ensuring that management effectively implements adequate measures. Maintaining regular, systematic surveillance over a process, system, program, project, or service, and comparing performance against expectations.įormally examining or assessing some aspects of an organization with the possibility or intention of instituting change if necessary. Officially agreeing to or accepting something as satisfactory (or in compliance)Ĭoming to a resolution after having considered relevant factual information and potential options Offering suggestions about the best course of action to adopt Requesting an explanation or justification calling into question Table 2 – List of Oversight Functions PLAN Functionsĭetermining how and when oversight actions will be taken by the oversight bodyĭefining what information is needed by the oversight body to fulfill its responsibilities In such situations, auditors could use the oversight functions as a starting point to develop their audit criteria. In other words, all major initiatives should have effective governance and oversight. It is also important to note that even where there is no discrete, independent oversight body responsible for overseeing a major initiative, it can still be reasonably expected that the functions presented in Table 2 would have to be exercised somehow. It is therefore important that auditors have a good understanding of the oversight mandate of the organization(s) they have decided to audit. Each oversight body's functions are defined in its mandate. However, not all oversight bodies will exercise all functions. They can approve risk management policies, make decisions on risk tolerance levels, review risk profiles, monitor the implementation of risk assessment processes, and communicate information on corporate risks. For example, boards of directors and other oversight bodies usually play many oversight functions in relation to corporate risk management. Often, an oversight body needs to exercise many functions in order to provide adequate oversight of a single process. (While some of the functions may be exercised in more than one stage of the management cycle, the table has been simplified.) The functions are categorized according to the part of the Plan, Do, Check, Act management model they belong to. The list in Table 2 defines the main functions exercised by oversight bodies to fulfill their oversight mandate. Oversight bodies are created to fulfill specific mandates.
0 Comments
Leave a Reply. |