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January 27, 2023

Former Deloitte CEO Sorry Not Sorry for Anyone Who Can’t Handle Being on an Audit Committee

According to a piece from Michael Rapoport and Joann Lublin in the Wall Street Journal today, audit committees are the "junk drawer" of corporate boards.

The workload of the powerful committees has expanded sharply beyond their core role of overseeing a company’s financial reporting. They are grappling with new regulations, whistleblower claims and issues like cybersecurity and foreign corruption. In addition, the Securities and Exchange Commission is expected to suggest new rules by the end of next month requiring them to disclose more about their activities.

“It’s not the favorite committee,’’ says Fredric Reynolds, a retired CBS Corp. chief financial officer and audit committee chairman at Mondelez International Inc. To attract committee members, he sometimes promises relatively short stints: “You’ll be released for time served and good behavior,’’ he tells directors.

Jeez, is HBO going to have to come out with an Oz sequel set in a board room?

Reynolds says his position as audit committee chair at Mondelez takes up around 100 hours a year. To put that into perspective, I spend 4 hours every Saturday volunteering at cat adoption stands including travel = so 208 hours a year. You're talking about an activity that works out to a commitment of about 2 hours a week, far less time than GC trolls spend formulating their next terrible comment. Is it really that bad?

Well, it gets worse:

Some boards appear to view the audit committee as a place to hand off any internal oversight issues, even if they are outside the committee’s traditional purview.

“Sometimes the audit committee is viewed as the kitchen junk drawer,’’ says Cindy Fornelli, executive director of the Center for Audit Quality, an accounting-industry group. Boards feel “if we don’t know what to do with it, we’ll give it to the audit committee.”

No wonder no one wants to be on one, then.

Wait, not no one. There's a certain former Deloitte CEO who loves the action:

Some directors remain unfazed by the heavy workload because they enjoy being where the action is. “It’s where you have a very broad access to management time and information about the business,” says James Quigley, audit committee chairman for Wells Fargo & Co.

Who do we think has the broadest access, the Quigs or long-time Wells Fargo auditors KPMG?

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