The Audit Committee
The Audit Committee
The role of the Audit Committee (AC) is to monitor the integrity of PKF Littlejohn’s financial affairs – including overseeing the firm’s system of internal control and risk management, and reviewing the independence and effectiveness of the external auditors.
AC members are appointed by the Board based on the respective experience and knowledge of finance, audit and governance matters of those individuals.
There are a minimum of three members of the AC, at least one of whom is an Independent Non-Executive Director.
Terms of Reference
The Terms of Reference of the AC can be viewed here.
The AC currently comprises of three members of the Board, including the two independent non-executive directors.
One of the key responsibilities of the AC is to monitor and review the effectiveness of the firm’s internal control and risk management systems. The AC undertook these duties in conjunction with the Board and by engaging with the various key risk controllers across the firm. This enabled the AC to satisfy itself that key risks, including areas of identified increased risk, were being addressed. The AC identified three particular areas of focus for the current year:
- The impact of the pandemic on the firm’s operations. The AC examined how the firm’s recent and significant IT systems enhancements had enabled it to continue to operate remotely with little disruption to its ongoing services to clients. The AC found that the firm’s clients, due to their nature, were mostly able to continue operations without too much disruption from the pandemic. In addition. the AC monitored the engagement of the firm’s leaders with its staff to help them to maintain operations and support their needs throughout the period.
- The impact of the firm’s continued growth on resources and quality. The firm’s continued strong growth has meant that maintaining sufficient expert resources at all levels continues to be a key area of focus for the business, ensuring it continues to deliver a quality product to its clients. The AC noted that there has been significant recruitment and promotion at all levels in the last year alongside significantly increasing headcount. It also looked at how, as the firm returns to more normal operations, an enhanced training programme is being implemented to ensure the partners and staff can continue to deliver the best possible service. As a fundamental driver to the firm’s success, the AC will continue to monitor the firm’s progress in this area.
- The impact of more listed clients and greater external scrutiny. The firm has continued to win more listed and highly regulated audit clients. The AC looked at how the firm’s systems and procedures, including oversight, continue to evolve to ensure the enhanced requirements are met.
In addition to scrutinising risk management, the AC was responsible for oversight of the audit of the firm’s financial statements. It did this by meeting with the auditors at the planning and completion stage of the audit and noted that there were no significant concerns arising out of the process.
Looking ahead, the AC, in conjunction with the Board, is in the process of evolving the Audit Committee into an Audit and Risk Committee, with increased responsibilities and separation of operation from the Board.