For rewards, get execution right

The Uday Kotak committee has further enhanced the role and responsibilities of audit committees by recommending:

Expansion of nature and type of disclosures such as long- and medium-term strategy and valuation reports in searchable and standard formats

Focus on key deltas in financial indicators and their causes

Capital deployment details to be disclosed

Analysis and comments on audit qualifications

Enhanced quarterly disclosures, scope of internal controls and the need to establish guidelines for audit quality

Auditor credentials disclosure, fees and reasons for resignation

When looked at as a package, the recommendations appear to be designed to enhance oversight, design IT-enabled approaches to gauge effectiveness of disclosures and controls. Many of the tasks being recommended are already the remit of many enlightened audit committees, but there will have to be patience for a steep learning curve for others. The way forward will include:

More frequent audit committee meetings, with sharp agenda items on cyber security, the vigil mechanism, the quality and effectiveness of internal controls, enhancing the quality of disclosures and valuation processes for various purposes.

Longer meetings with a great deal of preparation. More than power points, a continuous engagement with the chief financial officer and company secretary will be crucial to bring about real change.

Very stringent processes for accomplishing the onerous tasks, requiring planning and engagement of a much higher order.

As a set of individuals involved in this very special task, all of us will have to raise our commitment, engagement and time spent. The rewards will be for those who get the implementation right. Boards will have to give enough time to audit committees to present their findings. Ultimately, I have no doubt that this will lead to better shareholder value creation.