New audit committee member onboarding
For new AC members, onboarding presents an added layer of complexity, given the intricacy and scope of the financial reporting/accounting issues, legal/regulatory compliance risks, and the range of nonfinancial reporting risks on the AC’s plate.
For any new director—particularly when joining the audit committee (AC)—a learning curve comes with the territory.
Just how steep that learning curve is, however, and how quickly a new director is able to contribute meaningfully to the work of the board and its committees, can hinge directly on the quality of the onboarding process.
Overview
Understanding the business, its strategy, risks, operations, and management team, including the impact on the business of the turbulence and disruptions of recent years—COVID, the Russia-Ukraine war, supply chain strains, global economic volatility, and regulatory and stakeholder demands for action on climate and a range of environmental, social, and governance (ESG) issues—is a major undertaking for new directors. Developing that understanding of the business, as well as the responsibilities and culture of the board and its committees takes time. But a structured onboarding process—including essential information and briefing materials, quality discussions with key people, and a “road map” for getting up to speed—can greatly accelerate a new director’s integration and contribution to the board’s work.
For new AC members, onboarding presents an added layer of complexity, given the intricacy and scope of the financial reporting/accounting issues, legal/regulatory compliance risks, and the range of nonfinancial reporting risks on the AC’s plate.
We offer the following framework for new AC members—and the management and audit professionals supporting them—to consider as they develop an onboarding process, including:
- Suggested reading for the new AC member, such as corporate documents and other briefing materials
- An initial orientation session
- Follow-up one-on-one meetings with key people in the organization to develop a deeper understanding of the business, its key governance processes, and its leaders
Formal orientation programs for new directors are fairly common, but these programs—without more—may be inadequate to get the new director up to speed and able to contribute to the work of the board early on.
Moreover, the onboarding needs for new directors will vary from director to director, depending on a number of factors, including the director’s background and experience, and the role the director is expected to play on the board and board committees. As a result, a new director should be prepared to take responsibility for his or her onboarding plan—working with management and others to determine how best to get up to speed and build a strong foundation for informed oversight.
Dive into our thinking:
New audit committee member/director onboarding
How quickly a new director is able to contribute meaningfully to the work of the board and its committees can hinge directly on the quality of the onboarding process.
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