And, while nine out of 10 respondents say their audit committee is more effective now than before the Sarbanes-Oxley legislation was enacted in 2002, many acknowledge there is still room for improvement -- particularly in the area of risk management, which they cited as their top priority.

"The current business and regulatory environment is sharpening the audit committee's focus on risk management," said Henry R. Keizer, Vice Chair - Audit, KPMG LLP. "The near 'perfect storm' of the credit crunch, economic slowdown and market volatility has placed risk management high on the audit committee agenda, where it is likely to stay for some time."

Overall, the nearly 300 public company audit committee members who responded to this year's survey ranked risk management as their top priority, replacing accounting judgments and estimates, which moved to second on the list.

Information Technology (IT) risk and governance moved up to third, with respondents indicating the least confidence in this area. One quarter of respondents said they were not clear about the areas of IT risk the audit committee is responsible to oversee and 26 percent said they were not satisfied with management's reports on IT risks.

Survey respondents expressed the highest levels of confidence in their oversight of traditional financial reporting areas, including accounting judgments and estimates, internal controls, and 404 compliance.

"Audit committees are more confident in their 'traditional' areas of financial reporting oversight," said Edward F. Smith, executive director of ACI. "But there's much less comfort in the area of risk management. They clearly want a better understanding of the company's risks and its risk management processes."

Smith pointed to two key challenges for audit committees that are highlighted by the survey: defining the audit committee's risk oversight responsibilities (half
the respondents expressed concern they have too much responsibility for risk oversight), and coordinating risk oversight activities with other board committees to better monitor potential risks (74 percent said communication and coordination of risk oversight activities among the audit committee, board, and other committees could be improved).

The study also found that the vast marjority --90 percent -- are concerned about the company's succession plans for the CFO and other key members of the financial reporting team, and most see room to improve their approach to evaluating the performance of the CFO and financial staff.