A formalised performance assessment process to improve audit committee performance in South Africa: A conceptual exploration

Abstract

There is concern worldwide about corporate governance, director liability, litigations and business failures, the economic recession and the quality of fi nancial reporting. Owing to these factors, new regulations and legislation aff ecting organisations and the related responsibilities imposed on audit committees, it is imperative that the performance of audit committees and individual members be enhanced and sustained. The King III Report and other corporate governance principles specify that the board, its committees and individual members should be evaluated regularly, which was not a requirement for individual committee members in King II. This
article examines formal guidelines and requirements to identify the factors aff ecting the audit committee and individual members’ performance, to determine whether their performance could be improved by formalising the assessment process and to develop a framework for measuring their performance. The balanced scorecard as a method of assessment or evaluation is examined and proposed to help audit committees to meet their requirements and improve the quality of their oversight  responsibilities. This article should be of value to boards of directors, audit committees and regulators in that the contributions of a more formalised performance assessment process as an internal governance mechanism towards facilitating the professional development of audit committee members are demonstrated.