- Foreword and Introduction
- 1. Introduction
- 2. The Audit Committee's functions and responsibilities
- 3. Membership of the Audit Committee
- 4. Relationships with key stakeholders
- 5. Conduct of the Audit Committee
- 6. Assessment of the Audit Committee's performance
- Part 2
- Part 3
PDF of Checklists And Proforma [0.5MB]
The performance assessment process should involve an assessment of the committee as a whole and may extend to an assessment of the performance of individual members.
A better practice committee will complete an assessment at least every two years to evaluate its performance against its charter and involve input from:
- the Chief Executive/Board on the quality and timeliness of assurance and advice provided by the committee;
- individual committee members on the effectiveness of the committee in meeting its responsibilities including planning, the decision-making process, and the relationship and quality of communication with stakeholders; and
- key stakeholders, for example, senior management, the Chief Financial Officer, the Chief Information Officer and external audit, on the effectiveness of the committee's stakeholder management.
Better practice tip: Assessment of the committee’s performance
The Audit Committee may wish to select a person, such as the Head of Internal Audit, to coordinate the assessment. The committee secretariat could undertake this role, or the committee could engage an external person to assist with the assessment process.
The results of the assessment should be provided to the Chief Executive/Board, who should consider the findings and any recommendations of the assessment and, if required, ensure appropriate action is taken to enhance the committee’s performance.
Assessment of an Audit Committee member’s performance
In an FMA entity, consideration of an executive member’s performance on an Audit Committee will, in practice, be undertaken as part of his/or her overall performance assessment.
It would be expected that the Chair of the Audit Committee would undertake a performance assessment of external members where an extension of the member’s tenure is being considered, taking into consideration whether the member has:
- a good understanding of the entity's business;
- a good understanding of, and commitment to, the committee's responsibilities;
- displayed the ability to act objectively and independently and made a constructive contribution to the work of the committee; and
- displayed a willingness to devote the time required to prepare for, and participate in, committee meetings.
In CAC entities, the Chair of the Board would generally incorporate an assessment of the performance of non-executive members of the Audit Committee into their overall performance assessment.
Part 3 includes a pro forma Audit Committee self-assessment questionnaire (page 107).
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