Aci Quarterly Newsletter Issue 28 New

Quarterly
newsletter 28
Audit Committee Institute
KPMG Board Leadership Center
Contents
On the 2017 audit committee agenda
New Audit Committee Handbook
Global Audit Committee Survey 2017 – Results
Brexit and Trump – Financial reporting implications
On the 2017 board agenda
Directors’ liability considerations
Financial reporting news
Other news and insights
2
About the Audit

Committee Institute
The Audit Committee Institute (ACI) champions
good corporate governance to help drive long-term
corporate value and enhance investor confidence.
Focusing on and supporting the director community,
ACI engages with directors and business leaders
to help articulate their challenges and promote
continuous improvement. Supported by KPMG
Board Leadership Center, ACI delivers actionable
thought leadership—on risk and strategy,
technology, compliance, financial reporting and audit
quality—all through a board lens.
KPMG Board Leadership Center serves as a
governance center, bringing together KPMG’s various
international board programmes—including the Audit
Committee Institute—all under a single umbrella.
3
Contents
On the 2017 audit committee agenda ....................................................... 06
New Audit Committee Handbook............................................................... 10
Global Audit Committee Survey 2017 – Results......................................... 12
Brexit and Trump – Financial reporting implications.................................... 22
On the 2017 board agenda ........................................................................ 26
Directors’ liability considerations................................................................ 30
Financial reporting news ............................................................................ 34
Other news and insights............................................................................ 35
© 2017 KPMG Central Services, a Belgian Economic Interest Grouping (“ESV/GIE”) and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Belgium.
4
Foreword
The first edition of 2017 of our Audit Committee
Institute Quarterly kicks off with flagging ACI’s
priority items for audit committees and boards in
carrying out their 2017 agendas and to help them
keep their eye on the ball.
This is followed by an introduction to our new

Audit Committee Handbook. Our Audit Committee
Handbook is an all-in-one reference on audit
committees, articulating the principles underlying
the audit committee’s role and providing a vast
amount of non-prescriptive guidance to help audit
committees and boards carry out their oversight
responsibilities.
Next we bring the results of our 2017 Global Audit

Committee Survey. Our survey aimed at polling
what the challenges and priorities are for audit
committees today and the results clearly showed
that, against a backdrop of heavy economic and
geopolitical uncertainty and in times of unseen
technological change, risk management is the
number one concern of audit committees.
We also zoom in on how the two major geopolitical

events of the year—the UK Brexit and the U.S.
Trump vote—are impacting financial reporting. We
flag a set of attention points to make sure your
company properly discloses the main effects of
these events in the 2016 annual reports.
The sixth article in our newsletter is a piece on

directors’ liability. This important theme for board
© 2017 KPMG Central Services, a Belgian Economic Interest Grouping (“ESV/GIE”) and a member firm of the KPMG network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Belgium.
5
directors is explored in a comprehensive overview of

what directors’ liability means in the Belgian context.
We finish this edition with a selection of timely

financial reporting and other news from the corporate
governance arena.
We hope this publication serves its intended purpose

of briefing you on the important developments
affecting your role.
If you require further information, please contact us at

ACI@kpmg.be with any comments or suggestions of
topics you would like to see receive attention.
Our ACI website (www.kpmg.com/be/aci) also

provides additional information, including previous
editions of the Audit Committee Institute Quarterly,
our Audit Committee Handbook and other useful ACI
publications, surveys, and other content.
Olivier Macq Wim Vandecruys

Chairman ACI Belgium Director ACI Belgium
6
On the 2017 audit committee agenda

Financial reporting, compliance, and the risk and Reinforce the audit committee’s direct
responsibility for the external auditor.
internal control environment will continue to be put
—specifically overseeing the auditor
to the test in 2017 by slow growth and economic selection process including any (mandatory)
tender process and auditor independence. Audit
uncertainty, technology advances and business
tenders are quickly gaining momentum in many
model disruption, cyber risk, greater regulatory countries around the world—legally required or
otherwise. The audit committee should ensure
scrutiny, and investor demands for transparency,
the tender process is carried out in an efficient
as well as dramatic political swings and policy and effective manner. Read ACI’s Audit Tendering
Guide to ensure the tender process delivers lasting
changes in the U.S., UK, and elsewhere. Focused,
benefits to your company. To ensure the auditor’s
yet flexible agendas—exercising judgment about independence from management and to obtain its
critical judgement and insights that add value to the
what does and does not belong on the committee’s
company, the audit committee’s direct oversight
agenda and when to take deep dives—will be responsibility for the auditor must be more than
just words in the audit committee’s terms of
critical. Drawing on insights from our recent survey
reference or items on its agenda. All parties—
work and interactions with audit committees and the audit committee, external auditor and senior
management—must acknowledge and continually
business leaders over the past 12 months, we
reinforce this direct reporting relationship
have highlighted eight items that audit committees between the audit committee and the external
auditor in their everyday interactions, activities,
should keep in mind as they consider and carry out
communications and expectations.
their 2017 agendas.
Give non-GAAP financial measures
a prominent place on the audit
committee agenda.
Following ESMA’s final report on
alternative performance measures published in
2015, regulators (and investors) in the U.S., UK
and elsewhere have expressed concerns about
misleading non-GAAP financial measures and
published additional guidance to help companies
evaluate the usefulness and acceptability of non-
GAAP financial information. SEC Chair Mary Jo
7
White said: “In too many cases, the non-GAAP and many companies will face significant
information, which is meant to supplement the implementation challenges during the transition.
GAAP information, has become the key message to
Implementation of these two new standards is
investors, crowding out and effectively supplanting
not just an accounting exercise; audit committees
the GAAP presentation.” In this environment, it is
will want to receive periodic updates on the status
critical that non-GAAP financial measures have a
of implementation activities across the company
prominent place on the audit committee agenda:
(including possible trouble spots), the adequacy
Have a robust dialogue with management about
of resources devoted to the effort, and the plan to
the process—and controls—by which management
communicate with stakeholders.
develops and selects the non-GAAP financial
measures it provides, their correlation to the actual
state of the business and results, and whether the Monitor key regulatory initiatives
non-GAAP financial measures are being used to to enhance transparency of the
improve transparency and not to distort results. audit process.
There continues to be significant discussion
internationally about the need for increased transparency
Monitor implementation plans and by the external auditor around the audit process. Under
activities for major accounting changes International Standards on Auditing (ISA 701)—while
on the horizon—particularly the retaining the current pass/fail model—auditors will soon
new revenue recognition and lease be required to describe in the audit reports of listed
international accounting standards. entities the key areas they focused on in the audit and
The scope and complexity of these implementation what audit work they performed in those areas. In the
efforts and the impact on the business, systems, U.S., the PCAOB is expected to issue a final standard on
controls, and resource requirements should be a the auditor’s reporting model, which is likely to require
key area of focus for audit committees. The new a description of “critical audit matters” in the auditor’s
revenue standard (effective January 1, 2018 for report. Auditors may have the primary responsibility for
calendar year-end companies) provides a single implementing the requirements, but they are relevant
revenue recognition model across industries, to and affect other stakeholders as well, in particular
companies, and geographical boundaries. While the audit committee. Audit committees should interact
the impact will vary across industries, many comprehensively with the auditor from the audit
companies—particularly those with large, complex planning stage through to the finalization of the audit
contracts—will experience a significant accounting report. In particular, consider whether disclosures in
change when implementing the new standard. The the financial statements or elsewhere in the annual
new standard will require companies to apply new report and/or in other investor communications need
judgments and estimates, so audit committees will refreshing, otherwise the auditor might be disclosing
want to inquire about the judgment and estimates more information about an item than the company.
process and how judgments and estimates are Engaging in early and open communication with the
reached. Under the new lease standard (effective auditor is crucial in this regard.
January 1, 2019 for calendar-year-end companies)
lessees will recognize most leases, including
operating leases, on the balance sheet. This
represents a wholesale change to lease accounting,
8
Redouble the company’s focus on ethics, coordinating with other governance, risk, and compliance
compliance, and culture. functions within the organization to limit duplication
Whether moving quickly to innovate and and, more importantly, to prevent gaps. Help maximize
capitalize on opportunities in new markets, leveraging collaboration between internal and external auditors. As
new technologies and data, and/or engaging with more internal audit moves to a higher value-added model, it
vendors and third parties across longer and increasingly should become an increasingly valuable resource for the
complex supply chains, most companies face heightened audit committee.
compliance risks. Coupled with the complex global
Quality financial reporting starts with
regulatory environment—the array of new healthcare,
the CFO and finance function; maintain
environmental, financial services, and data privacy
a sharp focus on leadership and
regulations—these compliance risks and vulnerabilities
bench strength.
will require vigilance. Help ensure that the company’s
In our latest global pulse survey, 44 percent of audit
regulatory compliance and monitoring programs are up-to-
committees were not satisfied that their agenda is
date and cover all vendors in the global supply chain, and
properly focused on CFO succession planning, and
clearly communicate the company’s expectations for high
another 46 percent were only somewhat satisfied. In
ethical standards. Take a fresh look at the effectiveness
addition, few were satisfied with the level of focus
of the company’s whistle-blower program. Does the audit
on talent and skills in the finance organization. Given
committee see all whistle-blower complaints? If not,
the rate of CFO turnover and the critical role the CFO
what is the process to filter complaints that are ultimately
plays in maintaining financial reporting quality, it is
reported to the audit committee? As a result of the radical
essential that the company have succession plans
transparency enabled by social media, the company’s
in place not only for the CFO but also for other key
culture and values, its commitment to integrity and legal
finance executives—the controller, chief accountant,
compliance, and its brand reputation are on display as
chief audit executive, treasurer—and perhaps the chief
never before. Ask for internal audit’s thoughts on ways to
compliance and chief risk officers. How does the audit
audit/assess the culture of the organization.
committee assess the finance organization’s talent
pipeline? Do employees have the training and resources
Redouble the focus on key areas of risk they need to succeed? How are they incentivized to
and the adequacy of the company’s stay focused on the company’s long-term performance?
risk management processes generally. What are the internal and external auditors’ views?
Leverage internal audit to the fullest extent
in this respect.
Make the most of the audit
In our 2017 Global Audit Committee Survey (see infra),
committee’s time together—inside
more than 40 percent of audit committee members think
and outside the boardroom.
their risk management program and processes "require
To address heavy workloads, many audit committees
substantial work;' and a similar percentage say that it is
are focusing on ways to improve their efficiency and
increasingly difficult to oversee those major risks. Audit
effectiveness—including refining their agendas and
Committees need to use all resources at hand in this
oversight processes, and reassessing their skills
respect, not in the least internal audit.
and composition. Keeping pace requires agendas that
Internal audit is most effective when it is focused on the are manageable (what risk oversight responsibilities
critical risks to the business, including key operational are realistic given the audit committee’s time and
risks (e.g., cyber security and technology risks) and expertise?), focusing on what is most important (starting
related controls, not just compliance and financial with financial reporting and audit quality), allocating
reporting risks. Help define the scope of internal audit’s time for robust discussion while taking care of “must-
coverage and, if necessary, redefine internal audit’s do” compliance activities, and ensuring the committee
role. Is the audit plan risk-based and flexible, and does it has the right composition and leadership. Leading audit
adjust to changing business and risk conditions? What committees recognize that the committee’s efficiency
has changed in the operating environment? What are and effectiveness in the boardroom increasingly hinges
the risks posed by the extended organization—sourcing, on spending time outside of the boardroom—visiting
outsourcing, sales, and distribution channels? What company facilities, interacting with employees and
role should internal audit play in auditing the culture of customers, and hearing outside perspectives—to
the company? Set clear expectations and make sure understand the tone, culture, and rhythm of the
internal audit has the resources, skills, and expertise organization.
to succeed. Challenge internal audit to take the lead in
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10
NEW Audit Committee Handbook

ACI celebrated its 10th anniversary with an What is in it for you?
exclusive Roundtable session on 25 October
— ACI’s guiding principles for audit committees
2016, looking back and to the future of audit reflecting the current risk-heavy business
environment and the ever-increasing workload
committees and launching our new Audit
of audit committees.
Committee Handbook.
— Complete set of fundamentals, leading
practices and ready-to-use tools to build and
Recognizing the challenges that audit committees sustain an effective audit committee.
face in meeting their increasingly demanding
— EU audit reform: Belgian specific guidance
responsibilities, the Audit Committee Institute on mandatory auditor rotation and non-audit
services.
(ACI) is delighted introduce our new Belgian ACI
Audit Committee Handbook. — Step-by-step guide on how to approach the
audit tender process.
The Audit Committee Handbook articulates, from — Practice-aid on enhanced ISA 701 audit reports
introducing key audit matters.
a Belgian perspective, the principles underlying
— Best practice guidance on audit committee
the audit committee’s role and provides an member induction.
array of non-prescriptive guidance to help audit
— Extended guidance for audit committee chairs.
committees and boards build and sustain effective
— Risk oversight essentials for the years ahead.
audit committees.
— Reflections on external audit effectiveness in
the digitalized world.
We sincerely hope you will find the combination of

leading practices, guiding principles and ready-to-
use tools useful to support you in your role.
We also would be delighted to come introduce

our handbook or provide hardcopies of the
handbook. Please contact us at ACI@kpmg.be
11
12
Global Audit Committee

Survey — Results
Given expectations for slow growth and economic and
political uncertainty, technology advances and business
model disruption, cyber threats, greater regulatory
scrutiny, and investor demands for transparency, it’s
hardly surprising that most audit committees around
the world point to risk management as the top
challenge facing the company in the year ahead. More
than 40 percent of respondents say their risk
management systems require substantial work.
Audit committees, by and large, continue to express

confidence in financial reporting and audit quality; yet,
along with risk management, our 2017 Global Audit
Committee Pulse Survey highlights ongoing concerns
about legal and regulatory compliance, managing
cyber security risk, and managing the control
environment in the company’s extended organization.
Of the more than 800 audit committee members
responding to our survey, nearly 4 in 10 said the
committee’s effectiveness would be most improved by
having a “better understanding of the business and key
risks,” while nearly a third said additional expertise
related to technology or cyber security would be helpful.
Most audit committees say their organizations have a
long way to go in their efforts to implement major
new accounting standards. Fewer than 15 percent
report a clear implementation plan for the new
revenue recognition standard, and fewer than 10
percent reported a clear plan for implementation of
the new leasing standard. And of those whose
companies are affected by the Organisation for
Economic Co-operation and Development’s (OECD)
country-by-country tax reporting, many expressed
concern about the lack of clarity or communication
with their committee on that issue. Survey
respondents also cited ongoing opportunities to
improve their company’s ability to manage cyber risks.
13
Six takeaways
Risk management is a top concern for CFO succession planning and bench
audit committees. The effectiveness of strength in the finance organization
risk management programs generally, as continue to be weak spots. Forty-four
well as legal/regulatory compliance, cyber security percent of audit committees are not satisfied
risk, and the company’s controls around risks, topped that their agenda is properly focused on CFO
the list of issues that survey participants view as succession planning, and another 46 percent are
posing the greatest challenges to their companies. only somewhat satisfied. In addition, few are
It’s hardly surprising that risk is top of mind for audit satisfied with the level of focus on talent and skills
committees—and very likely, the full board—given the in the finance organization. Given the increasing
volatility, uncertainty, and rapid pace of change in the demands on the finance organization and its
business and risk environment. More than 40 percent of leadership—financial reporting and controls, risk
audit committee members think their risk management management, analyzing mergers and acquisitions
program and processes “require substantial work,” and (M&A) and other growth initiatives, shareholder
a similar percentage say that it is increasingly difficult to engagement, and more—audit committees want
oversee those major risks. to devote more time to the finance organization,
including the talent pipeline, training, and
Internal audit can maximize its value to
resources, as well as succession planning for the
the organization by focusing on key areas
CFO and other key finance executives.
of risk and the adequacy of the company’s
risk management processes generally. Two key financial reporting issues may
The survey results show that audit committees are need a more prominent place on audit
looking to internal audit to focus on the critical risks to committee agendas: Implementation
the business, including key operational risks (e.g., cyber of new accounting standards and
security and technology risks) and related controls—and non-GAAP financial measures. Few
not just compliance and financial reporting risks. They audit committees say their companies have clear
also want the audit plan to be flexible and adjust to implementation plans for two major accounting
changing business and risk conditions. changes on the horizon—the new revenue
recognition and lease accounting standards. Given
Tone at the top, culture, and short-termism
the scope and complexity of those implementation
are major challenges—and may need more
efforts and their impact on the business, systems,
attention. A significant number of audit
controls, and resource requirements, those efforts
committee members—roughly one in four—
should be a key area of focus. In addition, audit
ranked tone at the top and culture as a top challenge,
committees ought to consider whether to increase
and nearly one in five cited short-term pressures and
attention to any non-GAAP financial measures,
aligning the company’s short- and long-term priorities as
which are an area of significant attention and
a top challenge. Meanwhile, nearly the same percentage
comment by regulators worldwide. Nearly a quarter
of audit committee members said they are not satisfied
of those surveyed say their role with respect to the
that their committee agenda is properly focused on
presentation of those metrics is very limited.
those issues.
Audit committee effectiveness hinges
on understanding the business. Audit
committee members say a better understanding
of the business and the company’s key risks would
most improve their oversight effectiveness. They also
view additional expertise in technology/cyber security
as being key to greater effectiveness, since it would
strengthen their ability to oversee those risks.
Risk management is a top concern for audit committees.
The effectiveness of risk management programs technology advances and business model disruption,
generally, as well as legal/regulatory compliance, cyber cyber threats, and greater regulatory scrutiny and
security risk, and the company’s controls around risks, investor demands for transparency. But more than
topped the list of issues that survey participants view 40 percent of audit committee members think their
as posing the greatest challenges to their companies. risk management program and processes “require
It’s hardly surprising that risk is top of mind for audit substantial work,” and a similar percentage say that it is
committees—and very likely, the full board—given increasingly difficult to oversee those major risks.
expectations for slow growth and economic uncertainty,
Q
From your perspective as an audit committee member, which
of the following issues pose the greatest challenges to your
company? (select up to three)
Effectiveness of risk management program 41%
Legal/regulatory compliance 34%
Managing cyber security risk 28%

Maintaining the control environment
in the company’s extended organization 28%
Tone at the top and culture of the organization 24%
Maintaining internal controls over financial reporting 22%
Ensuring that internal audit is maximizing its value 21%

Pressures of short-termism and aligning the 19%
company’s long-term and short-term priorities
Implementation of new accounting standards 13%
(e.g., revenue recognition, leases, financial instruments, etc.)
Fraud risk 13%
Talent and skills in the finance organization 11%
Key assumptions underlying critical accounting estimates 9%
Assessing audit quality 8%
CFO succession planning 7%
Readiness for the OECD’s country-by-country tax reporting 3%
Other 3%
Multiple responses allowed
We are clearly seeing an increased focus by boards more important than ever that the board be sensitive to
on key operational risks across the extended global the tone from, and example set by, leadership; reinforce
organization—e.g., supply chain and outsourcing risks, organizational culture (i.e., what the company does, how
information technology (IT) and data security risks, etc. it does it, including a commitment to compliance and the
And, at a higher level, boards are paying more attention management of risk); and understand the behaviors that
to the capital “R” risks that may pose the greatest risk the company's incentive structure may encourage.
to the company. In today's business environment, it is
Q What is the status of your company’s risk management
program/process?
42% Risk management system implemented but requires

substantial work
38% Robust, mature risk management system in place
15 % Risk management system in planning/development stage
4% No active/formal effort to implement risk management system

1% Other
Q
Are you satisfied that your audit committee has the time and
expertise to oversee the major risks on its agenda in addition to
carrying out its core oversight responsibilities?
Time Expertise
51%51% Yes
46%
39% Yes – but increasingly difficult
43%
9% No 11 %
May not equal 100% due to rounding
Q In your view, what are the most significant gaps in your company’s
ability to manage cyber risk? (select up to two)
Organizational awareness/culture 31%
Keeping technology systems up to date 31%
Vulnerability from third parties/supply chain 24%
Talent/expertise 22%
Monitoring and reporting of cyber threats (e.g., dashboard) 21%
Internal “people” risk 20%
Readiness and response/containment of breaches 19%
No significant gaps 4%
Other 1%
Despite the intensifying focus on cyber security, the focused on the company’s “adjacencies,” which can
cyber risk landscape remains fluid and opaque, even serve as entry points for hackers. The board should
as expectations rise for more engaged oversight. As help elevate the company’s cyber risk mind-set to an
the cyber landscape evolves, board oversight—and the enterprise level, encompassing key business leaders, and
nature of the conversation—must continue to evolve. help ensure that cyber risk is managed as a business or
Discussions are shifting from prevention to an emphasis enterprise risk—not simply an IT risk.
on detection and containment and are increasingly
Internal audit can maximize its value to the organization by focusing
on key areas of risk and the adequacy of the company’s risk
management processes generally.
The survey results show that audit committees are looking compliance and financial reporting risks. They also want the
to internal audit to focus on the critical risks to the business, audit plan to be flexible and adjust to changing business and
including key operational risks (e.g., cyber security and risk conditions.
technology risks) and related controls—and not just
Q
Beyond focusing on financial reporting and compliance risks,
what steps can internal audit take to maximize its value to your
organization? (select all that apply)
Expand audit plan on key areas of risk

(e.g., cyber security and key operational and 56%
technology risks) and related controls
Maintain flexibility in audit plan to adjust

53%
to changing business and risk conditions
Expand audit plan on effectiveness of

49%
company’s risk management processes generally
Improve talent and expertise in internal audit organization 42%
Helping to assess/“audit” the culture of the organization 27%
Company does not have an internal audit function 4%

None of the above 1%
Internal audit is most effective when it is focused on the functions within the organization to limit duplication
critical risks to the business, including key operational and, more importantly, to prevent gaps. Help maximize
risks (e.g., cyber security and technology risks) and collaboration between internal and external auditors.
related controls—not just compliance and financial
reporting risks. Help define the scope of internal
As internal audit moves to a higher value-added model,
audit’s coverage—and if necessary, redefine internal
it should become an increasingly valuable resource for
audit’s role. Challenge internal audit to take the lead in
the audit committee.
coordinating with other governance, risk, and compliance
Two key financial reporting issues may need a more prominent place
on audit committee agendas: Implementation of new accounting
standards and non-GAAP financial measures.
Few audit committees say their companies have clear In addition, audit committees ought to consider
implementation plans for two major accounting changes whether to increase attention to any non-GAAP financial
on the horizon—the new revenue recognition and lease measures, which are an area of significant attention and
accounting standards. Given the scope and complexity comment by regulators worldwide. Nearly a quarter
of those implementation efforts and their impact on the of those surveyed say their role with respect to the
business, systems, controls, and resource requirements, presentation of those metrics is very limited.
those efforts should be a key area of focus.
Q
What is your audit committee’s role in considering how the
company should present non-GAAP financial measures—and which
ones to present? (select all that apply)
Audit committee discusses with management the
31 % process by which management develops non-GAAP

financial measures
27 % Discusses adequacy of disclosure controls and processes

around development of non-GAAP financial measures
Company does not provide non-GAAP

25 %
financial measures
Discusses the correlation of the non-GAAP financial measures with

24%
actual state of the business and results
24% Audit committee’s role/input is very limited
It is critical that non-GAAP measures have a prominent the questions to consider: What is the process by which
place on the audit committee agenda and that the the company decides whether to present non-GAAP
committee have a robust dialogue with management measures—and which ones to provide? What is the
about the process—and controls—by which role of management's disclosure committee? What is
management develops and selects the non-GAAP the role of the audit committee? Is the audit committee
financial measures it provides and their correlation to satisfied that non-GAAP measures are being used to
the performance of the business and results. Among improve transparency and not to distort results?
Audit committee effectiveness hinges on understanding
the business.
Audit committee members say a better understanding additional expertise in technology/cyber security as being
of the business and the company’s key risks would most key to greater effectiveness, since it would strengthen
improve their oversight effectiveness. They also view their ability to oversee those risks.
Q What would most improve your committee’s overall

effectiveness? (select up to three)
Better understanding of the business and risks 39%
Additional expertise—technology/cyber security 31%
Greater willingness and ability to challenge management 27%
Greater diversity of thinking, background,

24%
perspectives, and experiences
More in-depth financial reporting and audit expertise 19%
Additional expertise—M&A, industry knowledge,

18%
risk, international, or other area
Deeper engagement by committee members 18%
Bringing “fresh thinkers” onto the committee 18%
Better pre-meeting materials 17%
Improved management of meeting agendas 11%
Clear succession plan for audit committee chairmen/members

7%
Removal of underperforming director(s) 5%
Better chemistry/dynamics 4%
Other 3%
Q
Which—if any—of the following areas pose significant concern to you
in terms of the company’s readiness for the OECD’s country-by-country
tax reporting (first report due December 31, 2017, for calendar year
companies)? (select all that apply)
Company is not affected 36%
Lack of clarity or communication with the audit committee

25%
on this issue to date
Identification of systems and process changes that will be

required to comply with the new documentation 21%
requirements
Reassessment of transfer pricing strategies and

17%
identification of those that are likely to be challenged
Development of a communications plan to explain and

interpret the country-by-country data and defend our 13%
transfer pricing strategies
No concern about the company’s readiness 13%
Other 2%
The obligation to report country-by-country tax changes will be required to comply with the new
information to all jurisdictions is also on the immediate documentation requirements? Have we assessed our
horizon, and the impact on multinationals will be transfer pricing strategies and identified those that
profound, with significant implications for tax compliance are likely to be challenged? Do we have an effective
and reporting functions, transfer pricing policies, tax communications plan to explain and interpret the
audits and controversies, and reputational risk. Audit country-by-country data and appropriately defend our
committees of multinationals will want to assess their transfer pricing strategies?
company's readiness: What systems and process
Survey respondents
Results are based on our global pulse survey conducted from August to October 2016.
Results shown are for 832 complete responses.
Role on the audit committee Company type

Other Public company
Not-for-profit
5%
Audit committee Private company – 7%
member family-owned
10%
45% 55%
15% 63%
Private company –
investor-owned
Audit committee chair
Annual revenue
Not applicable
Greater than
$10 billion
5%
7%
$5 billion to 7%
less than 32%
$10 billion
15% Less than

$250 million
$1.5 billion to
less than
7% 14%
$5 billion 13%
$250 million to
less than
$1 billion to $500 million
less than
$1.5 billion
$500 million to
less than
$1 billion
22
Brexit and Trump

Financial reporting implications
As businesses develop their responses to the It will be some time before the longer-term effects
of the UK referendum result and the U.S. vote
outcome of the UK referendum on continued EU
become clear. However, in the short-term, elevated
membership and the election of Donald Trump geopolitical instability and economic uncertainty
may result in increased market volatility for asset
in the U.S., the business-as-usual of preparing
prices and exchange rates inter alia.
financial reports and auditing continues. There
As a consequence, audit committees will be
are some short term accounting and reporting
assessing the impact of the increased economic
implications to consider when preparing annual uncertainty and market volatility on annual
financial statements and ensure management are
financial reports.
monitoring developments to assess what impact,
if any, these have on the business model, strategy,
business plans, forecasts and financial reporting.
Communicating impacts and implications
Following the vote results, investors will want to

understand how business models of companies
active on UK and U.S. markets are exposed to each
new opportunity and risk. Transparent business
model disclosure and clarity over longer-term
strategy will be more important than ever during
this period of uncertainty.
Companies may need to reassess their principal

risk disclosures in the context of the changed global
business environment. Do the vote results create
new risks to shareholder value, or change the scale
and likelihood of existing risks?
23
The focus on communication of the implications exit scenarios, and is the tone and balance of the
of the referendum result also extends into the discussion appropriate? Companies are not required
financial statements. Disclosures of accounting to quantify potential future performance impacts,
judgements, sources of estimation uncertainty but should provide relevant factual information to
and financial instrument risks may also need enable users to form their own assessment, for
to be revisited. We may well see increased example through business model disclosures.
disclosure of sensitives of estimates to changes in
assumptions—and of more key assumptions being Accounting in an environment of uncertainty
identified for disclosure. and market volatility
Though challenging, articulating the potential Uncertainty and volatility put particular pressure on
impact on the business model and longer-term financial statement measures and forward-looking
strategy with as much clarity as possible will be assessments such as asset valuations, inventory
more important than ever during this period of values, consideration of onerous contracts, deferred
uncertainty. tax asset recognition, recoverability of receivables,
hedge effectiveness testing and even the going
Companies should consider whether their front-end concern assessment and covenant compliance.
narrative provides sufficient information to allow
the implications of uncertainties, exit terms and Perhaps the greatest focus will be on impairment tests.
strategic responses to be assessed. There are various factors to consider, for example:
Does reporting provide sufficient information to — Updating cash flows in value in use calculations:
enable shareholders to assess the implications of while long term implications may not be clear,
and there are limitations on taking any planned
restructurings into account, cash flow forecasts
Narrative reporting may still need updating to reflect changes in
the competitive environment, growth rates or
Risks Response Clarity exchange rate implications.
Viability Assessment Assumptions — Determining discount rates: incorporating

changes in risks and market conditions.
Prospects Expectation Implications
— Determining which assets are tested for
impairment: do changes in the market, or in
Financial statements internal expectations mean that more assets
need to be tested for impairment?
Uncertainty Estimates Projections
Valuations of assets or liabilities, such as properties,
Disclosure Clarity Sensitivity pension balances, or financial instruments will also
be affected by market activity and so particular
Valuations Assumptions Information focus on the approach taken and assumptions used
can be expected.
24
Together with foreign exchange implications, For internal audit (and other internal assurance
variability in such valuations might be expected to providers), question whether the plan continues to
be one of the greatest areas of focus as users look be focused on the key risks facing the business.
at the impact on financial statement balances. Should some audits be accelerated? Does more
need to be done about contingency planning or
Annual reports the robustness of key risk indicators which provide
early warning of issues on the horizon?
For annual financial reports, valuations and
estimates involving observable market transactions Question whether the external auditors are
may have more limited available relevant still focused on the right audit risks. How have
information at that date, and updated valuations the changes to the geopolitical and economic
may be required. environment been factored into the audit plan and
are the planned responses to risks still appropriate?
Annual reports could be expected to include What impact does the increased uncertainty and
additional discussion of factors relating to the market volatility have on the scope of the audit and
vote results. Is the required explanation of events audit materiality?
relevant to understanding the position of the entity
complete—particularly where exchange rates have Consider whether the audit should be deploying
a significant impact, circumstances affect the fair more specialist expertise in the light of the impact
value of financial instruments or where estimates on pensions, financial instruments and other
have changed. valuations?
Audit considerations Are your auditors keeping you appraised of how

their audit plans are changing? Do the changes
Audit plans—both internal and external—may accord with your understanding of how the
need to be revisited in the light of the uncertainty uncertainties associated with Brexit and Trump are
resulting from the UK and U.S. votes. impacting your business model, strategy and the
principal risks facing the business?
25
26
On the 2017
board agenda
In 2017, corporate performance will still require
the essentials—managing key risks, innovating
and capitalizing on new opportunities, and
executing on strategy. But the context is changing
quickly—and perhaps profoundly—as advances in
technology, business model disruption, heightened
expectations of investors and other stakeholders,
and global volatility and political shifts challenge
companies and their boards to rethink strategy
development and execution, and what it means to
be a corporate leader. Drawing on insights from our
recent survey work and interactions with directors
and business leaders over the past 12 months, we
have highlighted seven items that boards should
keep in mind as they help guide the company
forward in the year ahead.
27
Recognize that connecting and Develop and execute the strategy

calibrating strategy and risk is more based on total impact. As we
important—and more challenging— noted at the outset, the context for
than ever. What a difference a few months corporate performance is changing
can make. The UK’s Brexit vote and a Trump win in rapidly as political, social, and regulatory forces
the U.S., which caught most observers—and many reshape the competitive landscape. Consideration
corporate strategies—flat-footed, will have major of the corporation’s role in society is moving
implications for global markets, and the geopolitical from the periphery to the center of corporate
landscape at large. That so few had predicted these thinking as expectations of investors, customers,
sea changes despite exhaustive analysis in the run- employees, and other stakeholders challenge
up to both events is a stark reminder to businesses companies to understand the total impact of
of how marketplace signals can be fundamentally the company’s strategy and activities. Strategy
missed (be it status quo thinking, bias toward development and execution requires a holistic
the familiar, or comfortable complacency) and approach, encompassing the full range of risks and
the playing field fundamentally altered overnight. opportunities—financial, reputational, regulatory,
The geopolitical landscape will become clearer, resource- and talent-related, and more—that impact
but expect the competitive landscape to remain the company and its many stakeholders over the
dynamic and cloudy, leaving little lead time. long term.
Technology advances and relentless innovation,
business model disruption, the emergence of
Millennials and other demographic shifts, evolving Take a hard look at the board’s
customer demands and employee expectations, composition: Is the talent in the
and more will put a premium on corporate agility boardroom aligned with the
and the ability to pivot as conditions change. company’s strategy and future
Think about constant transformation, talent risk needs? Given the demands of
management and the opportunities afforded by today’s business and risk environment (and
“new” technology. Does management have an increasing scrutiny by investors, regulators, and the
effective process to monitor changes in the external media), aligning boardroom talent with company
environment and test the continuing validity of strategy—both for the short term and the long
strategic and risk assumptions? Does this process term as the strategy evolves—should be a priority.
provide early warning that adjustments may be Not surprisingly, 43 percent of respondents in
necessary? Does the board have the right people our recent survey, Building a Great Board, cited
and perspectives to make the necessary linkages “resistance to change” and “status quo thinking”
between external forces and the company’s as hampering their board-building efforts. Consider
strategy and risk profile? Make strategy an ongoing key recommendations of the NACD Report on
discussion (versus an annual “decision”) that Building the Strategic Asset Board and the WCD
incorporates smart risk taking and robust scenario Commission/KPMG report, Seeing Far and Seeing
planning with plenty of what-ifs on the table. In Wide: Moving Toward a Visionary Board. As noted
short, “strategy and risk” should be hardwired in these reports, directors should focus squarely
together and built into every boardroom discussion. on board composition/diversity and succession
planning, robust evaluations, tenure limits, director
recruitment and onboarding, board leadership,
stakeholder communications, and continuing
director education—all tailored to the company and
industry. In short, “periodic board refreshment”
should give way to robust, continual improvement
and active board succession planning.
28
Pay particular attention to potential the company’s crisis planning aligns with its risk
risks posed by tone at the top, culture, profile, how frequently the plan is refreshed,
and incentives. While a robust risk and the extent to which management—and the
management process is essential to board—conduct mock crisis exercises. Do we
prevent and mitigate risk events, it is not enough. have communications protocols in place to keep
As we have seen in recent years, many of the crises the board apprised of events and the company’s
that have posed the most damage to companies— response?
financial, reputation, and legal—have been caused
by a breakdown in the organization’s tone at the
top, culture, and incentives. As a result, boards Reassess the company’s
need to pay particular attention to these capital shareholder engagement program.
“R” risks, which may pose the greatest risk of all Shareholder engagement is rapidely
to the company. In today’s business environment, becoming a top priority for companies
it is more important than ever that the board be as institutional investors increasingly hold boards
acutely sensitive to the tone from (and example set accountable for company performance and demand
by) leadership and to reinforce the culture of the greater transparency, including direct engagement
organization, i.e., what the company does, how it with independent directors. Institutional investors
does it, and the culture of compliance, including a expect to engage with portfolio companies—
commitment to management of the company’s especially when investors have governance
key risks. concerns or where engagement is needed to make
a more fully informed voting decision. In some
cases, investors are calling for engagement with
Reassess the company’s crisis independent directors. As a result, boards should
prevention and readiness efforts. periodically obtain updates from management
Crisis prevention and readiness have about its engagement practices:
taken on increased importance and Do we know and engage with our largest
urgency for boards and management teams, as the shareholders and understand their priorities? Do we
list of crises that companies have found themselves have the right people on the engagement team?
facing in recent years looms large. Crisis prevention What is the board’s position on meeting with
goes hand-in-hand with good risk management— investors? Which of the independent directors
identifying and anticipating risks, and putting in should be involved? Strategy, executive
place a system of controls to prevent such risk compensation, management performance,
events and mitigate their impact should they occur. environmental and sustainability initiatives, and
We are clearly seeing an increased focus by boards board composition and performance are likely on
on key operational risks across the extended global investors’ radar.
organization—e.g., supply chain and outsourcing
risks, information technology and data security
risks, etc. Do we understand the company’s Refine and widen boardroom
critical operational risks? What has changed in discussions about cyber risk and
the operating environment? Has the company security. Despite the intensifying
experienced any control failures? Is management focus on cyber security, the cyber-
sensitive to early warning signs regarding safety, risk landscape remains fluid and opaque, even as
product quality, and compliance? Of course, even expectations rise for more engaged oversight. As
the best-prepared companies will experience a the cyber landscape evolves, board oversight—and
crisis; but companies that respond quickly and the nature of the conversation—must continue to
effectively—including robust communications— evolve. Discussions are shifting from prevention
tend to weather crises better. Assess how well to an emphasis on detection and containment,
29
and increasingly focused on the company’s

“adjacencies,” which can serve as entry points
for hackers. The Internet of Things and the digital
records that surround people, organizations,
processes, and products (“code halos”) call for
deeper—if not wholly different—conversations. The
board should help elevate the company’s cyber-
risk mind-set to an enterprise level, encompassing
key business leaders, and help ensure that cyber
risk is managed as a business or enterprise
risk—not simply an IT risk. Do discussions about
M&A, product development, expansion into new
geographies, and relationships with suppliers,
customers, partners, advisers, and other third
parties factor in cyber risk? Help ensure that
awareness of—and accountability for—cyber
security permeates the organization, with a security
mind-set, proper training, and preparation for
incident response. Is cyber security risk given regular
and adequate time on the board’s agenda? Does the
board need a separate committee to focus on it?
Where are the company’s biggest vulnerabilities, and
how is it protecting its most critical data sets? Do
we benchmark against others in the industry? Do we
have a cybersecurity scorecard and a robust cyber-
incident response plan? Do directors work under the
assumption that any email could become public at
any time?
30
Directors’ liability
considerations
Since in practice a lot of questions are raised
concerning the liability of directors within a private
limited liability company (“besloten vennootschap
met beperkte aansprakelijkheid” / “société privée
à responsabilité limitée) and a public limited liability
company (“naamloze vennootschap” / “société
anonyme”), we took the opportunity to set out in
this newsletter the basic principles regarding such
liability.
1. Civil contractual liability for shortcomings

in management ( “management error” - article
262 / 527 Companies’ Code (hereafter referred
to as “CoCo”))
As representative of a private or public limited

liability company, being the two most popular
forms of companies in Belgium, a director is liable
towards the company for the execution of its
mandate.
In order to determine whether or not management

errors have been made, the managerial actions of
a director are compared with those of a “normal
prudent and careful director acting under the
same circumstances”. Thus, a director shall
commit (a) management error(s) when a normal
prudent and careful director acting under the same
circumstances would not have performed the(se)
action(s).
It concerns a contractual liability which can in

principle only be invoked by the company. The claim
can be initiated in name of the company by the
general meeting of shareholders or by a minority
shareholder under the conditions set out in article
290 CoCo (for a private limited liability company)
31
or article 562 CoCo (for a public limited liability can, notwithstanding the fact that the directors
company). The company needs to deliver proof of have received discharge, invoke the director’s
the management error, the damage it has suffered liability until the statute of limitation period has
as well as the existence of a causal link between expired.
the management error and the damage.
2. Civil liability for violation of the Companies’
The liability for management errors is in principle Code or of the articles of association (article 263 /
personal, hence, each director will be obliged 528 CoCo)
to compensate the damage caused by his own
actions. Nevertheless, the court can hold the Directors are jointly and severally liable towards the
directors liable “in solidum” (or even jointly company as well as towards third parties for all the
and severally in case of joint errors), when their damage caused by a breach of provisions of the
various erroneous actions have led to the same Companies Code or of the articles of association of
damage. Consequently the damage could be the company.
claimed from each director for the entire amount of
indemnification. The director who has paid the total Directors will be held liable and an indemnification
indemnification, will then be able to claim from the will need to be paid provided that the claimant has
other directors their respective portion. delivered proof of the violation and of his damage
as well as of the existence of a causal link between
Examples of management errors are the said breach and damage.
following: closing an agreement under clearly
disadvantageous conditions, granting a credit In case of a breach of the Companies’ Code or
without further consideration, dismissing an of the articles of association, the directors are
employee in a way that obliges the company to presumed to be jointly and severally liable. A
pay a high compensation, involving the company in director can escape from this joint and several
dubious operations, omission to subscribe to the liability, provided that he can demonstrate that
necessary insurance policies, etc. (which is rather difficult in practice):
The limitation period for claims regarding directors’ — he did not take part in the violation;
liability, based on the articles 262 / 527 CoCo — no fault can be imputed to him;
(as described here above) amounts to 5 years. — he had no knowledge of the violation, or he has
Furthermore, the director’s liability can, in principle, denounced such violation at the first general
no longer be invoked by the company in the event meeting of shareholders after he became aware
the general shareholders’ meeting has granted thereof and the breach has been mentioned in
discharge to the directors. Please note, however, the convocation to this general shareholders’
that discharge has no effect whatsoever on the meeting.
liability of the directors towards third parties, who
32
General examples of a violation of the articles of 4. Special and criminal liabilities

association or the Companies Code are: omission
to file the annual accounts, omission to draw up the The Companies’ Code, the tax legislation and some
consolidated annual accounts, omission to convoke (and in recent years quite a lot of) economic laws
the general meeting of shareholders, performing provide for several additional grounds for director’s
actions that fall outside the scope of the corporate (criminal) liability, such as, a liability for the deficit
purpose of the company or that are in conflict with in case of bankruptcy when a manifest grave error
the companies’ interest, violation of the conflict of of a director that has contributed to the bankruptcy,
interests procedure, etc. has been established.
As regards the limitation period for claims Moreover, directors can be held liable for the
regarding directors’ liability, the same rules apply as non-payment of withholding tax on professional
mentioned here above under 1. income, the VAT, and social security contributions.
According to this legislation, directors are on the
3. Tortuous liability one hand personally liable for the payment of the
withholding tax on professional income or the
According to article 1382 of the Civil Code, each VAT in case of a repeated lack of payment (i.e.
person who has caused damage to another person in case of quarterly payments: non payment of
is obliged to indemnify the latter for the damage two outstanding debts within one year and, in
suffered. case of monthly payments: non payment of three
outstanding debts within one year).
The tortuous liability can be invoked by either the
company or by third parties, for the damage they The liability of directors for social security
suffered following a management act or omission contributions on the other hand only applies in
that does not qualify as a contractual fault. The case of bankruptcy or in case of a violation of the
claimant will have to prove the director’s fault, the information duty as stipulated in article 40ter of the
damage (other than mere damage resulting from Law of 27 June 1969 reviewing the Resolution law
mismanagement or negligence in the execution of 28 December 1944 regarding the social security
of the director’s mandate) and the existence of a of employees.
causal link between the fault and the damage.
Furthermore, directors can be held criminally liable
An act/omission is not considered to be of a mere as well. For example in case of late filing of the
contractual nature if it can be qualified as a violation annual accounts (art. 126, §1, 1° CoCo), refusal
of the general duty of care that applies to everyone, to convene the general meeting of shareholders
regardless of any contractual obligation, or, if this when validly requested, not or incorrectly (omission
act or omission constitutes a criminal offence. of required data) drawing up of the annual report,
abuse of the company’s assets (art. 492bis Criminal
An example of such a fault towards third parties Code), etc.
is, for instance, the execution of a sale-purchase
agreement on behalf of the company, whilst the According to article 5 of the Criminal Code, a legal
director knew or ought to have known that the entity will be held criminally liable for any offences
company was insolvent. that are inextricably related to the accomplishment
of its object or the preservation of its interests
The statute of limitation for a tortuous claim for or which, according to the factual circumstances,
director’s liability amounts in principle to 5 years. were committed on its behalf. If an individual
(e.g. director) willfully and knowingly commits
an offense, he can be held jointly liable with the
company.
33
Also other specific legislation (such as

environmental or economic legislation—if
applicable) could impose criminal liabilities
on the directors of the company.
5. Possible limitation mechanisms?
Finally we would like to point out that a number of

mechanisms exist that can limit the (civil) liability of
directors. For instance, a company can subscribe to
a director’s liability insurance for its directors or a
hold harmless agreement could be agreed upon.
It goes without saying that tailored advice for the

specific case or set-up at hand is required.
Article by Christophe Piette Counsel at Klaw
34
Financial reporting news

Regulators’ focus for 2016 includes the impact Revenue—Regulator calls for transparency
of new standards and Brexit on IFRS 15 impacts
The European regulator, ESMA, has issued a The European regulator, ESMA, has issued
statement highlighting the common areas that a public statement promoting consistent
European national regulators will be focusing application of IFRS 15 Revenue from Contracts
on when reviewing listed companies’ 2016 IFRS with Customers and transparent disclosure in
financial statements. Its three key priorities cover: the lead up to initial application. In particular, the
statement sets out ESMA’s expectations with
– disclosures of the impact of the new standards; respect to an issuer’s disclosures on the potential
– presentation of financial performance, including impacts of the initial application of IFRS 15 in its
the topical issue of alternative performance 2016 and 2017 annual financial statements and
measures; and interim financial statements during 2017.
– debt / equity classification.
For those companies potentially affected by

Brexit, ESMA is also encouraging disclosure of the
associated risks, and the expected impacts and
uncertainties on their business activities. Although
the topics included in ESMA’s statement are those
deemed to be most relevant at a European level,
regulatory bodies outside of Europe are also likely
to take notice, and to pay particular attention to
many of the same topics.
Insights—Your tool for applying new and

existing IFRS
With the effective dates for the new standards on

revenue and financial instruments fast approaching—
and leases close behind—this is a critical time for
every company reporting under IFRS. Insights into
IFRS will help you rise to the challenges ahead. It
provides in-depth, easy-to-understand guidance
and draws on the hands-on experience of our IFRS
specialists. It can be used alongside our forthcoming
suite of Guides to annual financial statements to
form your complete guide to the year end.
Visit our website at www.kpmg.com/be/aci and

download Insights into IFRS: An overview, which
provides a high-level briefing for audit committees
and boards.
Read more of any of the publications above and more on IFRS:
– KPMG Belgium IFRS Institute: www.kpmg.com/be/en/topics/ifrs–institute

– KPMG Global IFRS Institute: www.kpmg–institutes.com/institutes/ifrs–institute
35
Other news and insights

GUBERNA / KPMG Directors Handbook Are Expectations on Board Members Too High?
Most Directors Think So.
GUBERNA, supported by KPMG, published its Global Survey of 4000+ directors reveals
Directors Handbook. The handbook aims to be the common boardroom attitudes and processes
reference handbook for best practices in corporate Sixty percent (60%) of directors say that there
governance. The handbook targets the individual is a gap between the expectations placed on
director rather than focusing on overall board boards and the reality of the board’s ability
governance, which makes it one-in-a-kind. to oversee a company, according to the 2016
Global Board of Directors Survey, conducted by
The text features a comprehensive overview of Professor Boris Groysberg and Yo-Jud Cheng of
leading practices and guidance related to the Harvard Business School, Spencer Stuart, the
following questions: WomenCorporateDirectors (WCD) Foundation, and
researcher Deborah Bell.
– What to do before accepting a board position?
– What to do during the execution of the mandate? – Disconnect between expectations and reality
– Why and how to evaluate the mandate? around board’s true oversight ability. Of the
– How to resign from a board position? 60% of directors who see a gap between the
expectations placed on boards and the reality
http://www.guberna.be/tools/handboek-voor-de- of the board’s ability to oversee a company,
bestuurder 64% believe expectations moderately exceeded
reality. Strikingly, 25% believed expectations far
Harnessing the power of cognitive technology exceeded reality.
to transform the audit
– Other skills in demand on boards. Behind the
This report takes an in-depth look at how advances “top 3” of strategy and financial/audit expertise
in cognitive intelligence are being adapted to and specific industry knowledge, directors also
auditing and how its application can enhance audit cited risk management and international/global
quality through greater coverage, deeper analytics expertise as most important to board service
and broader perspectives on controls, processes today. Areas named least frequently as important
and risks. were sales and marketing, and compensation and
succession planning expertise.
The use of computer technology has been a
mainstay in financial statement audits for decades. – Measuring performance—with consequences.
However, recent advances in computing power will As greater regulatory requirements have put
have a transformative impact on both how audits board performance under a microscope, many
are conducted and the overall financial reporting boards have instituted evaluations as part of their
landscape. structure. Indeed, the survey revealed that more
than two-thirds of boards conduct performance
The application of cognitive technology will evaluations of directors. One-third of respondents
fundamentally affect the way audit information is have served on a board where evaluations were
used and understood. By significantly increasing the used to remove a director.
ability to evaluate larger volumes of both structured
and unstructured data, cognitive technology will https://wcd.site-ym.com/news/313756/Are-
allow our audit teams to dig deeper into financial Expectations-on-Board-Members-Too-High-Most-
information for a more detailed and comprehensive Directors-Think-So.htm
audit. It will also enable us to sharpen our focus on
higher value audit activities in areas of increased
business risk and reporting complexity.
https://assets.kpmg.com/content/dam/kpmg/
us/pdf/2016/11/us-audit-CognitiveFactSheet.
pdf?logActivity=true
About ACI
The Audit Committee Institute (ACI) champions good corporate

governance to help drive long-term corporate value and enhance investor
confidence. Focusing on the audit committee and supporting the
director community, ACI engages with directors and business leaders to
help articulate their challenges and promote continuous improvement.
Supported by KPMG Board Leadership Center, ACI delivers actionable
thought leadership—on risk and strategy, technology, compliance,
financial reporting and audit quality—all through a board lens.
ACI Professionals
Olivier Macq, Chairman ACI Belgium

KPMG Bedrijfsrevisoren – Réviseurs d’Entreprises, Partner
Wim Vandecruys, Director ACI Belgium

KPMG Bedrijfsrevisoren – Réviseurs d’Entreprises, Director
Contact us
Audit Committee Institute

Bourgetlaan – Avenue du Bourget 40
B–1130 Brussel – Bruxelles
www.kpmg.com/be/aci
E–mail: ACI@kpmg.be
Audit Committee
@ACI_BE
Institute in Belgium
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate
and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act
on such information without appropriate professional advice after a thorough examination of the particular situation.
Designed by KPMG Brussels
Publication date: March 2017

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Quarterly

About the Audit

New Audit Committee Handbook............................................................... 10

Global Audit Committee Survey 2017 – Results......................................... 12

Brexit and Trump – Financial reporting implications.................................... 22

On the 2017 board agenda ........................................................................ 26

Directors’ liability considerations................................................................ 30

Financial reporting news ............................................................................ 34

Other news and insights............................................................................ 35

This is followed by an introduction to our new

Next we bring the results of our 2017 Global Audit

We also zoom in on how the two major geopolitical

The sixth article in our newsletter is a piece on

directors is explored in a comprehensive overview of

We finish this edition with a selection of timely

We hope this publication serves its intended purpose

If you require further information, please contact us at

Our ACI website (www.kpmg.com/be/aci) also

Olivier Macq Wim Vandecruys

On the 2017 audit committee agenda

NEW Audit Committee Handbook

We sincerely hope you will find the combination of

We also would be delighted to come introduce

Global Audit Committee

Audit committees, by and large, continue to express

Effectiveness of risk management program 41%

Legal/regulatory compliance 34%

Managing cyber security risk 28%

Tone at the top and culture of the organization 24%

Maintaining internal controls over financial reporting 22%

Ensuring that internal audit is maximizing its value 21%

Talent and skills in the finance organization 11%

Key assumptions underlying critical accounting estimates 9%

Assessing audit quality 8%

CFO succession planning 7%

Readiness for the OECD’s country-by-country tax reporting 3%

Multiple responses allowed

42% Risk management system implemented but requires

38% Robust, mature risk management system in place

15 % Risk management system in planning/development stage

4% No active/formal effort to implement risk management system

May not equal 100% due to rounding

Organizational awareness/culture 31%

Keeping technology systems up to date 31%

Vulnerability from third parties/supply chain 24%

Monitoring and reporting of cyber threats (e.g., dashboard) 21%

Internal “people” risk 20%

Readiness and response/containment of breaches 19%

Multiple responses allowed

Expand audit plan on key areas of risk

Maintain flexibility in audit plan to adjust

Expand audit plan on effectiveness of

Improve talent and expertise in internal audit organization 42%

Helping to assess/“audit” the culture of the organization 27%

Company does not have an internal audit function 4%

Multiple responses allowed

Audit committee discusses with management the

31 % process by which management develops non-GAAP

27 % Discusses adequacy of disclosure controls and processes

Company does not provide non-GAAP

Discusses the correlation of the non-GAAP financial measures with

24% Audit committee’s role/input is very limited

Multiple responses allowed

Viability Assessment Assumptions — Determining discount rates: incorporating