The New York City Bar’s Financial Reporting Committee has asked the New York Stock Exchange to reconsider a rule requiring listed companies’ audit committees to discuss risk management policies. A March 5 letter from committee chair Michael Young, a partner at Willkie Farr & Gallagher, said the NYSE’s Rule 303A.07 is problematic because it "calls upon audit committees to assume some degree of responsibility for the oversight of risks beyond the risks associate with financial reporting." Young added, "There is little reason to assume that an audit committee, whose expertise will normally reside in the disciplines of financial reporting and financial statement presentation and disclosure, will possess particular expertise in such broader subjects.
He also said that "the level of responsibility to be assumed by the audit committee is itself ambiguous and may contribute to ineffective oversight of risk management at the board level." Young noted, "We are concerned that the existing rule serves to confuse the audit committee’s role as compared to other board committees, as well as the role of the board as a whole, with resulting opportunity for loss of accountability and desired flexibility."
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