Good morning. Audit committees, which are often composed of directors with an extensive background in finance or accountancy, like CFOs, carry a lot of weight on corporate boards. And their workloads are increasing.
For example, in January, I wrote about the audit committee of U.S. agricultural giant Archer-Daniels-Midland Co. (ADM) leading an internal investigation into accounting issues related to the company’s nutrition segment, which produces ingredients for both human and animal food. Pending the outcome of the investigation, the board placed the CFO, Vikram Luthar, on administrative leave, and Ismael Roig was appointed interim CFO.
ADM provided an update on Tuesday disclosing that a “material weakness” has been identified in its internal control over financial reporting in regard to accounting practices and procedures for intersegment sales. ADM also noted that it “continues to cooperate with the Securities and Exchange Commission and the Department of Justice in this matter,” according to the statement.
The ADM episode shows how the stakes for audit committees can get very high. But aside from such urgent matters, what challenges do audit committees face more broadly?
