NACD and KPMG Partner on Audit Committee Blueprint Highlighting 10 Essential Areas of Focus as Part of the Future Of The American Board Initiative

NACD and KPMG Partner on Audit Committee Blueprint Highlighting 10 Essential Areas of Focus as Part of the Future Of The American Board Initiative

• KPMG Worked with a Group of Board and Business Leaders to Identify 10 Critical Areas for Audit Committee Focus Going Forward

• Audit Committees Face Expanded Responsibilities for Risk and ESG Oversight

• Regulation of Climate/ESG Disclosures by the SEC and Foreign Regulators are Game-Changers for the Audit Committee

• Talent in the Finance Organization will be Vital to Keeping Pace with the Corporate Reporting Landscape

• Oversight of Financial Reporting, Disclosures, and Auditors Remain Core Role of a Board's Audit Committee

WASHINGTON, DC (May 2, 2023) – The National Association of Corporate Directors (NACD), the authority on boardroom practices representing more than 23,000 directors, in partnership with KPMG and its Board Leadership Center, today published their Audit Committee Blueprint as part of the NACD Future of the American Board initiative.

Highlighting 10 essential areas of focus, the report gives updated guidance to help audit committees at public and private companies navigate increasingly complex developments in environmental, social, and governance (ESG) issues, cybersecurity and data privacy, geopolitics, and more.

The Future of the American Board Commission's Audit Committee Working Group, a joint panel of experts composed of board leaders, notable governance practitioners, NACD-affiliated directors and senior leaders from KPMG, authored the blueprint. The Audit Committee Working Group is the second of four Future of the American Board working groups to publish guides this year in key areas: compensation, audit, nominating and governance, and risk.

While the core responsibilities of audit committees—oversight of financial reporting, related controls, disclosures, and oversight of auditors—fundamentally have not changed, the Audit Committee Working Group underscored a number of factors that have raised the stakes and increased the workload of audit committees.

The report provides guidance, observations, and forward-looking considerations and actions in 10 critical areas: financial reporting, risk oversight, ESG risk and disclosures, talent in the finance organization, audit quality, internal audit's value, transparency, compliance and culture, critical alignments, and audit committee's focus and effectiveness.

"The 10 areas of focus that we identified are not fundamentally new. But our discussions put them into a new light and fresh context—some, including ‘critical alignments,' with a note of urgency," said director Mary A. Winston. "Taken together, they can provide an audit committee with a good overarching view—a framework—for reassessing and fine-tuning its oversight practices, skill sets, and leadership."

"With audit committees and boards at another inflection point, the insights and suggested actions highlighted can help every audit committee reassess its effectiveness at this pivotal moment for audit committees, boards, and corporate America, and position itself for the future," said John H. Rodi, leader of the KPMG Board Leadership Center and member of the Audit Committee Working Group.

"There is no doubt that expanded risk oversight and ESG oversight responsibilities — coupled with changing regulation of disclosures — are front of mind for all directors who serve on audit committees," said Peter Gleason, president and CEO of NACD. "This blueprint and its 10 essential areas of focus will be of utmost value to boards in this era of increased attention on audit committees. We are grateful to the diverse and talented directors and the experts at KPMG who contributed their time and experience to this work as part of our ambitious Future of the American Board initiative."

A digital version of The Future of the American Board Audit Committee Blueprint is available at NACDonline.org.

About NACD
The National Association of Corporate Directors (NACD) is the premier membership organization for board directors who want to expand their knowledge, grow their network, and maximize their potential.

As the unmatched authority in corporate governance, NACD sets the standards of excellence through its research and community-driven director education, programming, and publications. Directors trust NACD to arm them with the relevant insights to make high-quality decisions on the most pressing and strategic issues facing their businesses today.

NACD also prepares leaders to meet tomorrow's biggest challenges. The NACD Directorship Certification^® is the leading director credential in the United States. It sets a new standard for director education, positions directors to meet boardroom challenges, and includes an ongoing education requirement that prepares directors for what is next.

With an ever-expanding community of more than 23,000 members and a nationwide chapter network, our impact is both local and global. NACD members are driven by a common purpose: to be trusted catalysts of economic opportunity and positive change—in business and in the communities we serve. To learn more about NACD, visit nacdonline.org.

About the KPMG Board Leadership Center
The KPMG Board Leadership Center (BLC) champions outstanding corporate governance to drive long-term value and enhance stakeholder confidence. Through an array of insights, perspectives, and programs, the BLC—which includes the KPMG Audit Committee Institute and close collaboration with other leading director organizations—promotes continuous education and improvement of public and private company governance. BLC engages with directors and business leaders on the critical issues driving board agendas—from strategy, risk, talent, and ESG to data governance, audit quality, proxy trends, and more. Learn more at kpmg.com/us/blc.

About the Future of the American Board
NACD convened the Future of the American Board Commission — a diverse, influential group of seasoned board leaders from top private and public companies and notable governance practitioners from across the investor, regulatory, and academic communities — to help guide boards through an increasingly turbulent and unpredictable future. The Commission's perspectives and experiences shaped a comprehensive framework for board governance centered on 10 Key Principles that boards can use and adapt to ensure they are fit for the future. This framework, released in the fall of 2022, is accompanied by a set of practical blueprints, focused on the shifting roles of the key board committees, issued in the spring of 2023. Recognizing that committees are the engine of the American board and that good governance begins at the committee level, NACD tapped world-renowned firms to help lead the Future of the American Board Committee Working Groups. Partners leading these working groups are KPMG (Audit), Marsh McLennan (Risk), Pearl Meyer (Compensation) and Korn Ferry (Nominating and Governance).

For more information, visit nacdonline.org/futureboard.

Press Contacts
Shannon Bernauer
sbernauer@nacdonline.org
571-367-3688

Susan Oliver
soliver@nacdonline.org
703-216-4078