The Audit Committee Purpose, Process & Professionalism KELLY TOMBLIN PRESIDENT & CEO JAMAICA PUBLIC SERVICE COMPANY LIMITED Presented to the GOJ Audit Commission Conference October 29, 2015
Walking the tight rope of corporate revolution: Discipline and Creativity
All Committees Always Start with the Vision/Mission Vision Mission CORE VALUES A ccountability, S ervice, P assion, I ntegrity, R espect, E xcellence 3
Know the Tensions JPS focused on being best in class Best in class requires new thinking JPS determined to become more disciplined Working hard on execution Creating and innovating historically have included a lot of broken rules Highest risk a company manages is lack of Sustainability employee engagement 4
T he Audit Committee – Facing Emerging Challenges • Expanded role – providing more than traditional financial oversight (e.g. Cyber Security) • Companies are auditing new and different areas of the business • More demand for Audit Committee creation from regulatory bodies • Changing risk profiles of organisations – increased demand for risk oversight (e.g. ERM implementation) • More active Board Oversight – challenge management decisions when appropriate • Can be a Catalyst for positive change – actively and passionately promoting business effectiveness vs simply providing a report card 5
Traditional Audit Committee Purpose To provide effective oversight and governance of key areas: Risk Management • Financial Reporting • Ethics and Compliance Matters • Internal and External Audit • Management and Internal Controls • BUT….Effective governance at its core is about: ‘DOING THE RIGHT THING’ Audit Committees should understand their roles and further the strategic imperative of the organization. 6
The Audit Committee -Spirit • Know your role, but ‘push the envelope’ • Be Proactive – Pay attention • Understand your Leadership Call to Action • Be Informed – promote open communication/reporting • Be Enquiring (ask the why questions) – through interaction and engagement with stakeholders (management, internal & external auditors, risk & compliance officers) • Become Catalysts – champions of change • Be Accountable – apply the ‘Noses in; Fingers out!’ principle
The Audit Committee – Before you Begin Focus on asking the right questions of: • The Key Stakeholders • Members of the Committee Key questions to consider: • What is the Board Mandate? • Do you have the right expertise to provide the required oversight to your organisation? • Are you adequately providing this oversight? 8
Audit Committees – Professionalism The Audit Commission should focus on the ‘who’ then the ‘what’ Individual Audit Committee members And collectively, Audit Committees should demonstrate: should: Integrity • Keep up with changing business • Independence environments • Objectivity • Apply best practices • Competence • Avoid conflicts of interest • Fearlessness • Pay strict attention to Board • matters • Draw on appropriate expertise, including your own • Assess your effectiveness 9
The Richer Conversation • Are you leading your corporation to fundamentally “be different? • Are you aligned with your leadership and the Board on what the organization‘s risks are? • Are you up to date on the industry you are auditing? • Do you work on the leadership skills needed for auditing? • Do you build trust before you begin? Beating people over the head isn’t leadership, it’s assault.
A Story of Internal Audit A Common Feeling: “James McLaughlin pitched cutting a position in the internal auditor’s office, saying his staff could not keep up with the drumbeat of reports each identifying some new problem to fix. “When you pick up a rock, there are 1,000 snakes and every snake has babies,” McLaughlin has said of district operations. “ Prof Elam observation - The job of an internal auditor is to identify the highest risk an entity faces, propose solutions, and then hopefully the risk is reduced. Pick the Snakes that are Venomous…… Remember Organizational Change is a Desire and Art Sustainability of Organizational Discipline is the Overarching Goal
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