In the survey, the majority of conference attendees cited recession-related risks as the top oversight concern for audit committees in 2008, followed by the quality of the company’s risk intelligence, and the tone at the top and culture of the organization.

"Boards and audit committees will need to focus on management's plans to address risks associated with an economic slowdown this year," said Henry R. Keizer, vice chair of audit for KPMG LLP and global head of audit for KPMG International. Among the risks identified were liquidity, cash management and market volatility stemming from the sub prime credit crisis.

Keizer, who moderated a panel discussion on establishing the 2008 audit committee agenda at the conference, also emphasized that audit committees need to understand their company’s debt situation, including debt maturities, and access to capital markets, as well as the impact of the recession on the company’s supply chain and distribution channels.

The quality of a company’s risk intelligence is also a top concern for audit committee members in 2008. According to survey results, 44 percent of conference attendees said that their company’s processes to identify significant business risks need improvement, and 18 percent said the risk reports that management provides to the audit committee are not meaningful/useful.

"Audit committees are taking a hard look at risk management processes, with a particular focus on the quality of risk inventories and assessments, as well as the usefulness of management’s risk reports," said Edward F. Smith, executive director of KPMG’s Audit Committee Institute (ACI), which sponsored the conference along with the National Association of Corporate Directors and Weil Gotshal & Manges. "Key challenges include identifying risks early-on, and maintaining a ‘big picture’ view of the risks facing the business."

Tone at the top, culture of the organization, and incentives also ranked high on the list of audit committee concerns.

According to survey findings, increased risk of earnings management, particularly during a recession, was identified as a top concern for 2008. And while more than 90 percent of conference attendees said their audit committee is very effective or somewhat effective in reinforcing an appropriate tone at the top, 44 percent are not satisfied that their audit committee/board helps address the risks associated with incentive compensation plans.

"The one-two punch of the subprime lending crisis and the economic downturn has put tremendous pressure on companies, and as a result, audit committees are paying close attention to the culture of the organization and its incentive structure." said Smith. "The pressure to maintain performance and meet expectations during an economic downturn carries with it some increased risks, such as the risk of earnings management, and overly aggressive budget-cutting. Audit committees also need to understand the behavior and risks that incentive compensation plans encourage."