Audit committee chair ñ the hardest non-exec role to fill and the most exposed

Recruiters and headhunters are finding it increasingly hard to find audit committee chairs, according to a senior partner at Ernst & Young.



Gerald Russell, who is in charge of Ernst &Youngís non-executive programme, says one of the main problems is keeping up to date with the plethora of changes currently underway in auditing standards, accounting standards and regulation.

Itís difficult to keep up when this is your day-to-day job, but for people on audit committees it must be extremely difficult.

Speaking to over 100 non-execs, at a seminar in London jointly hosted by exec-appointments.com and Ernst & Young, Russell said the feedback he received, particularly from headhunters, was that they were filling audit committee chair roles with some difficulty, particularly for companies with a US registration.

Research conducted for Ernst &Young by MORI in their captains of industry survey late last year had already highlighted the problem. When asked if they were more or less likely to become an audit committee chair, a ìstunningî 66 per cent of those surveyed said they were less likely to take up the role. Their feelings were summed up by one respondent who said: ìI wouldnít touch it with a barge pole.î

Is being an audit committee chair, Russell asked, the most exposed non-exec role there is?

He warned of a new pressure facing audit committee chairmen which is coming from investor ranks. Investors are increasingly wanting to have access to audit committee chairs in the same way as they do with the remuneration committee. They want to ask questions about the auditing of earnings and subjective judgments made. They want to be a fly on the wall of the audit committee meeting. How far it will get I donít know, but certainly there is a real head of steam building up behind it. Coupled with this, he said, there was the possibility that investors would be empowered to ask auditors questions directly at the AGM.

Another issue on the horizon for the chairs of audit committees is the Operating Financial Review. Russell said: If OFRs are really going to get take off and if they are really going to start talking about the strategy of the company, you can bet your bottom dollar that the person who is going to have to spend most time understanding the editorial content of what is going to be put out in the statement is the audit committee chair.î

ìSo,ì Russell asked, ìwho wants to be an audit committee chair?î Those who do, he suggests, will have to be a lot more circumspect and, he predicts, that life for todayís and tomorrowís audit committee chairs is set to get even more difficult.