AUDIT COMMITTEE QUESTIONNAIRE: AUDITOR

EFFECTIVENESS

BEST PRACTICES FOR AUDIT COMMITTEES

AUDITOR EFFECTIVENESS: SELF-ASSESSMENT

Highly Effective Auditors

An auditor’s foundational effectiveness with an audit committee requires an objective, constructive mindset along
with a strong understanding of the company, industry, business and related culture, risks and strategies. The
audit team should act as the eyes and ears of the committee. Additional critical success factors of highly effective
auditors include:

(Rating Scale: 1 = Outstanding; 2 = Solid; 3 = Needs Attention; 4 = Very Poor)

• Relationships: Maintain appearance, mind-independence and a strong mutual relationship of trust and
confidence (i.e., healthy skepticism) with management and the committee. The auditor should recognize that
the client is the board of directors and the audit committee. (Insert Rating)
• Knowledge of the Audience: Maintain a strong knowledge of the committee dynamics, relationships and
operating style. (Insert Rating)
• Expectations: Make sure the auditor’s committee expectations are proactively sought and clearly understood
by the auditors. Each expectation needs to be considered in all communications when performing tasks.
Management and the committee should be involved in planning the committee activities and meeting agendas.
(Insert Rating)
• Issue Management: Management, followed by the committee if necessary, should ensure there is effective
anticipation of issues, with a full candid discussion and timely response to avoid surprises and immediate
crisis. (Insert Rating)
• Communications: Ensure there is carefully planned dialogue and focused presentations on relevant matters
responsive to the committee charter, risks and expectations for the committee. Management and internal and
external auditors should have seamless professional coordination. Incorporate candid, unvarnished
commentary on qualitative aspects of financial reporting, controls, people and the basis for auditor conclusions
on difficult judgments and other important matters. (Insert Rating)
• Performance Assessment: The audit team should perform a self-assessment and inquiry of management
and the audit committee about performance against established expectations. (Insert Rating)

Key Auditor Best Practices

Relationships:
• Audit team leaders meet annually with the audit committee chairman outside the normal meeting
environment. They review the committee expectations and charter, provide input on committee annual plans
and encourage the joint involvement of management and internal and external auditors. (Insert Rating)
• Maintain regular contact with the chairman throughout the year to communicate, build trust and confidence,
and coordinate with management to keep the committee current on relevant new financial/control topics.
(Insert Rating)

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• Selectively include advisory personnel (tax, industry or other experts, concurring partner and/or advisory
partner) or other key persons in committee meetings, but only when there is a clear purpose and role. (Insert
Rating)
• Understand and respect management’s position. Specifically:
− Assure that management is not surprised by auditor comments to the committee.
− Anticipate and respond to business, financial and potential risks in a timely manner. Encourage using a
formal risk management process to focus on management, auditor and audit committee attention.
− Thoroughly discuss any disagreements with management in advance of committee meetings. Advise
management on specifically how and why these will be handled with the committee. (Insert Rating)

Communications:
• Listen well, think and talk straight, and allow significant meeting time for dialogue and questions. (Insert
Rating)
• Meet (or at least talk) with the audit committee chairman and management in advance of each committee
meeting. Agree on pre-read materials, meeting format and time allocation. (Insert Rating)
• Focus meeting discussions on the following:
− Key-risk areas and related risk controls.
− Explanations of the basis for auditor conclusions on significant financial statement matters (e.g., judgments
and estimates).
− Qualitative assessments of accounting/reporting practices and peer comparisons.
− Responses to questions on pre-read materials. (Insert Rating)
• Distribute relevant pre-read materials in advance, generally as standalone information for the committee.
(Insert Rating)
• Respond directly to committee questions. Get to the point quickly, be decisive and take a position. (Insert
Rating)

INTERNAL AUDIT DEPARTMENT

Interviewee: _______________________________________________________________________________

Position: __________________________________________________________________________________

Interviewer: ________________________________________________________________________________

Interview date: _____________________________________________________________________________

Additional comments regarding the interview:

______________________________________________________

Answers represent thoughts of the interviewee. Inform the interviewee that information is confidential, if
applicable.
• How long have you been on the audit committee? How did you get involved?
• What do you feel is your role as a committee member?
• What is the company’s process for monitoring and controlling business risks?
• How often does the audit committee review the internal audit department charter to see if it is consistent with
their expectations or changing conditions in the organization?
• What is your understanding of the role of the internal audit department?

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• What should their role be?
• What are the committee’s expectations for internal auditing? How are these communicated?
• Do you feel the work and scope of the current internal audit function is enough? If not, what should be
changed?
• Describe the relationship you and the other members of the audit committee have with the internal audit
director. Is there any interaction outside of the regularly scheduled committee meetings?
• Describe your impression of the relationship between the internal audit director and executive management. Is
the director an integral part of the management team?
• Does the internal audit department get involved with areas beyond “traditional” internal controls (e.g., process
improvement and consulting on operating problems/issues)? Should they?
• How does the audit committee get involved in annual planning/budgeting for the internal audit department? Are
the business risks considered important by the committee being covered?
• What areas would you like to see covered by the internal audit department that are not currently covered?

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