One of the biggest problems that audit committees face is that their jurisdiction has steadily grown over the years such that they are now covering too many different areas and have an unsightly workload. What to do?

The logical answer is to move oversight over some of the areas for which the audit committee doesn’t have to be involved to another board committee. Here are six things to consider when doing that:

1. The governance committee should have a discussion about this and consider whether a new board committee is needed or whether some areas can be moved to an existing committee.
2. This sort of analysis also is a natural fit for the board evaluation process. How do each of the directors feel about their current workload? Which oversight areas do they think might be a better fit with a different committee?
3. Look at the listing standards to see what areas of risk management can be handled by a risk committee. For example, cybersecurity, AI and operational risk/safety may be appropriately handled by a risk committee.
4. Consider giving all nonmanagement directors access to the materials for all board committees so that directors who suddenly get a new area to oversee have a leg up on being prepared for their new duties.
5. If a new committee is created, to ease the transition, consider making a couple of directors members of both the existing and the new committee for a period of time for continuity purposes if scheduling permits.
6. Allow time for a fulsome report to the board for any new issues and for issues that are moved to another committee. This will help ease any concerns as to whether the committee to which an area was transferred is doing an adequate job in its new role.

Authored by

Broc Romanek

Cooley