The Boardroom Brief

Audit committees play a critical role in sustaining organizational trust. In the local regulatory landscape guided by SEC Memorandum Circular No. 24, s. 2019. They are the board’s assurance arm, responsible for protecting financial integrity, overseeing risk, and ensuring compliance with laws and standards.

"An effective audit committee transforms data into insight"

As enterprises scale, audit committees must evolve from compliance reviewers into strategic governance anchors. This brief outlines practical actions that transform oversight into lasting enterprise value.

1. Define Clear Purpose and Authority

Audit committees should operate with a formal charter approved by the board and aligned with SEC requirements.

Checklist:

Charter

Specifies scope, reporting lines, and independence

Mandate

Includes oversight of financial reporting, internal control, and risk

Annual Charter Review

Ensures alignment with new regulations.

2. Strengthen Composition and Independence

The committee’s effectiveness depends on who sits at the table.

Best Practice:

Majority Independent Directors

At least one with financial or audit expertise

Rotation of Members

To maintain objectivity

Ongoing Governance Training

For committee members

3. Enhance Information Flow and Transparency

Strong oversight relies on reliable data, not summaries.

Action Points:

Require detailed internal audit and risk reports, not condensed management updates.

Leverage digital dashboards for audit status and issue tracking.

Document discussions and resolutions for accountability.

4. Integrate with Internal and External Auditors

Audit committees are most effective when they close the communication gap between auditors and management.

How to Implement:

Hold joint sessions with internal and external auditors quarterly.

Review auditor independence declarations.

Align audit priorities with enterprise risk assessments.

5. Track Audit Recommendations to Completion

Findings lose value when follow-through is weak.

Execution Steps:

Maintain an audit issue tracker with responsible persons and timelines.

Require status reporting in every meeting.

Recognize teams that achieve timely corrective action.

6. Regularly Evaluate the Committee’s Own Performance

Boards that assess their audit committees annually drive better results.

Evaluation Focus:

Quality of insights shared with the board.

Timeliness of responses to emerging risks.

Balance between compliance review and strategic discussion.

Governance Takeaways for Enterprises

Audit Committees

 Must evolve with business complexity.

Oversight

Should create value, not just compliance assurance.

Independence & Expertise

Are non-negotiable.

Transparency

Builds investor confidence and resilience.

When to Reassess Your Audit Committee Framework

Before Regulatory Registration

 or IPO filing.

When Adding Subsidiaries

or entering new markets.

After Recurring Audit Findings

or control issues.

During Board Composition

or leadership changes.

Ahead of Investor Due Diligence

or governance ratings.

An empowered audit committee is a signal of corporate maturity. It connects financial integrity, risk management, and strategic foresight. Forming the backbone of sound governance.

Design audit committee frameworks that meet regulatory expectations & drive performance.

Begin your governance enhancement program.

Let's Talk

Downloadable PDFs - Governance Toolkit

MC No. 24 s.2019 – Code of Corporate Governance for Public Companies and Registered Issuers

Defines audit committee composition, duties, and reporting requirements in the Philippines.

Click to download

Commission on Audit (COA) – Internal Control Standards for the Philippine Public Sector (ICSPPS)

Comprehensive guide on internal control frameworks adaptable to private enterprise governance.

Click to download

Revised PSE Manual on Corporate Governance (2022)

Issued by the Philippine Stock Exchange. It provides updated guidance on audit committee duties, disclosure practices, and performance evaluations aligned with SEC standards.

Click to download

SEC Memorandum Circular No. 4, s. 2019 – Sustainability Reporting Guidelines

Provides guidance for integrating ESG oversight. Now often under audit committee scope.

Click to download

References

1. Securities and Exchange Commission (SEC Philippines) – Regulatory body overseeing corporate governance frameworks, disclosure obligations, and audit committee structures in the Philippines.

   • Source: https://www.sec.gov.ph

2. Philippine Stock Exchange (PSE) – Provides governance manuals, disclosure rules, and corporate governance policies for listed companies.

   • Source: https://www.pse.com.ph

   
   

3. Commission on Audit (COA Philippines) – Publishes internal control and audit standards applicable across public and private sector governance frameworks.

   • Source: https://www.coa.gov.ph

   
   

4. Department of Finance (DOF Philippines) – Sets national policies on fiscal management, transparency, and risk governance that influence corporate accountability practices.

   • Source: https://www.dof.gov.ph