Audit committees at a crossroads: adapting to the new regulatory framework.

Audit committees are at the center of an increasingly complex and regulated business landscape. As legislation becomes stricter, committees must adapt and take on new roles that go beyond simple financial oversight. This changing environment has led to a renewed focus on transparency and the usefulness of information in corporate reporting, a central theme at a recent meeting organized by the Audit Committee Institute (ACI). Francisco Gibert, a partner at KPMG, emphasized the transformation that corporate governance is undergoing, highlighting the crucial role that audit committees will play in this process. The recent approval of the Business Sustainability Information Bill underscores this shift, as it requires companies to provide information about their environmental, social, and governance impact. This step aligns with the European Directive on corporate sustainability reporting, whose implementation is still pending. Eduardo Sanchiz, chairman of the Audit and Control Committee at CaixaBank, stressed the primary responsibility of the committees: to ensure that internal controls and financial information are accurate. However, the inclusion of new sustainability elements has added additional layers to their work, forcing committees to manage an increasing flow of informational requirements. This increase in responsibilities has not been without criticism. Javier Pérez Farguell, chairman of the Audit Committee of Grupo Catalana Occidente, warned about the risk of over-regulation and the overcomplication of audit processes. Pérez argues that while it is vital to maintain adequate oversight, the current regulation is already sufficient and should not result in an additional burden for companies. Montserrat Trapé, chairwoman of the Audit and Compliance Committee of Meliá Hotels International, also expressed concern about the impact that excessive regulation can have on companies' internal resources. The time and effort dedicated to meeting compliance and reporting requirements are growing, which could affect operational efficiency and the committees' focus on their essential functions. The importance of the audit committee goes beyond legal compliance; it represents a bastion of transparency and trust, both for boards of directors and for the market and investors. In a constantly changing geopolitical context, committees must conduct continuous risk assessments, adapting their approaches to the particularities of internationalized companies. Identifying and prioritizing risks has become an indispensable imperative to navigate market uncertainty. Careful management of the risk catalog is essential. Experts agree that cybersecurity and information protection have escalated in importance and require priority attention. This focus on risk management is crucial to ensuring the sustainability and stability of companies in the long term. Technology also plays an increasingly relevant role in the field of auditing. Artificial intelligence is being integrated into audit methodologies, although according to Gibert, a revolution in the way of working has not yet occurred. However, the implementation of AI promises not only to improve efficiency in reporting but also to facilitate risk identification and alert generation. As committees face an ever-evolving regulatory landscape, experts warn that the complexity of financial reporting will intensify. Gibert anticipates significant changes in the regulatory agenda, which will require committees to continuously adapt. Trapé also points out that the increasing length of management reports, which will now include more information on sustainability, could detract from clarity in communication with investors. The challenge lies in balancing the amount of information provided with the need to maintain transparency. Some investors prefer more concise and relevant reports, raising the question of whether the accumulation of data truly contributes to a better understanding of company performance. Experts advocate for simplifying information to improve clarity and effectiveness in reporting. In conclusion, audit committees find themselves at a decisive moment, where their ability to adapt to legal changes and market demands will determine the success of companies. The search for a balance between compliance, transparency, and the usefulness of information will be crucial in the coming years as companies navigate an increasingly complex and regulated environment.