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鈥檚 plate.
For any new director鈥攑articularly when joining the audit committee (AC)鈥攁 learning curve comes with the territory.
Just how steep that learning curve is, however, and聽how quickly a new director is able to contribute meaningfully to the work of the board聽and its committees, can hinge directly on the quality of the onboarding process.
Overview
Understanding the business, its strategy, risks,聽operations, and management team, including the聽impact on the business of the turbulence and聽disruptions of recent years鈥擟OVID, the Russia-Ukraine war, supply chain strains, global economic聽volatility, and regulatory and stakeholder demands for聽action on climate and a range of environmental, social,聽and governance (ESG) issues鈥攊s a major undertaking聽for new directors. Developing that understanding聽of the business, as well as the responsibilities and聽culture of the board and its committees takes time.聽But a structured onboarding process鈥攊ncluding聽essential information and briefing materials, quality聽discussions with key people, and a 鈥渞oad map鈥澛爁or getting up to speed鈥攃an greatly accelerate a聽new director鈥檚 integration and contribution to the聽board鈥檚 work.
For new AC members, onboarding presents an聽added layer of complexity, given the intricacy and聽scope of the financial reporting/accounting issues,聽legal/regulatory compliance risks, and the range of聽nonfinancial reporting risks on the AC鈥檚 plate.
We offer the following framework for new AC聽members鈥攁nd the management and audit聽professionals supporting them鈥攖o consider as they聽develop an onboarding process, including:
- Suggested reading for the new AC member,聽such as corporate documents and other briefing聽materials
- An initial orientation session
- Follow-up one-on-one meetings with key聽people in the organization to develop a deeper聽understanding of the business, its key governance聽processes, and its leaders
Formal orientation programs for new directors are聽fairly common, but these programs鈥攚ithout more鈥攎ay be inadequate to get the new director up to聽speed and able to contribute to the work of the board聽early on.
Moreover, the onboarding needs for new directors聽will vary from director to director, depending on a聽number of factors, including the director鈥檚 background聽and experience, and the role the director is expected聽to play on the board and board committees. As a聽result, a new director should be prepared to take聽responsibility for his or her onboarding plan鈥攚orking聽with management and others to determine how best聽to get up to speed and build a strong foundation for聽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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