In preparation for the upcoming audit committee conference in Chicago in June, Bank Director asked bank attorneys and accounting experts speaking at the conference to name the top issue facing bank audit committees in 2012-2013. Most thought audit committees will have to wrestle with risk issues, whether it’s the risk created by certain types of compensation or the risk of running into problems complying with all the new rules resulting from the Dodd-Frank Act.
“If not number one, compensation risk will certainly be one of the top issues facing audit committees over the next 18 months. And a key question audit committees need to ask themselves is: Are our pay practices defensible? Whether the compensation review involves peer group composition, external benchmarking, internal equity and incentive plan risk assessments, or true pay-for-performance, investors and regulators alike will want evidence that all of the reward components are fair. Going forward, simple assurances won’t be enough to satisfy them.”
—Patrick J. Cole, human resources senior consultant, Crowe Horwath LLP
“The top issue facing audit committees this year is how to handle forward-looking risk management, including consumer compliance, regulator exam and balance sheet risk. “
—Ronald H. Janis, partner, Day Pitney LLP
“The accounting issues are complex, and the bank regulators are taking a very conservative approach to interpreting them, which may or may not be in accordance with past accounting practice (historical GAAP). Their conclusions on the time frame for the implementation of related adjustments can also be problematic.”
—Bill Knibloe, partner, Crowe Horwath LLP
“The top issue for bank audit committee members is how can the audit committee improve its risk management program and focus on key risks? Do management and the board have a clear, concise response program in case of a crisis?”
—Michael T. Rave, attorney, Day Pitney LLP
“Audit committee members should continue to increase their knowledge and education on banking because the banking model will demand more from directors.”
— Wynne E. Baker, member-in-charge, KraftCPAs PLLC
