Cost cutting has been a key response of most companies to the economic crisis: With revenue growth flat or negative, there hasn't been much choice. This article from Directorship magazine discusses the sustainability of cost cutting and presents some questions for directors to think about and discuss with management.

From reductions in staff to steep curbs on travel and face-to-face meetings, cost cutting has been deep and wide, and not necessarily strategic. Unlike previous recessions, current cost reductions appear to be long-term, perhaps permanent. A key consideration for every audit committee and board is whether these cost reductions, often coupled with corporate restructurings and reorganizations, can be sustained.

As companies cut costs and implement workforce reductions, the control environment becomes even more important, and the role of internal audit becomes more critical. Monitoring the impact of cost reductions should be high on the board's agenda, and boards need to consider whether the company's delivery model has changed permanently.