How audit committees can improve disclosure

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How audit committees can improve disclosure

The percentage of audit committees providing public disclosure on many key metrics has increased in recent years, but opportunities for greater transparency remain, according to a yearly report published Wednesday by Audit Analytics and the Center for Audit Quality (CAQ), which is affiliated with the AICPA.

An examination of public company proxy disclosures demonstrates that increasing numbers of companies in the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600 have increased the information they provide to the public since 2015 in a number of areas.

The 2019 Audit Committee Transparency Barometer report shows that from 2015 to 2019:

Meanwhile, disclosures that the audit committee is responsible for cybersecurity risk oversight have at least tripled for all three S&P groups since 2016. Disclosures revealing whether the board has a cybersecurity expert and explaining the committee assignments of the board’s cybersecurity expert also have grown rapidly as this area has become a huge focus in corporate governance.

But other areas of disclosure have been stagnant during the years that the CAQ has presented the survey. Disclosures surrounding audit firm compensation have decreased from 2015 levels in some cases, and no S&P 500 companies disclosed significant areas addressed with the auditor from 2016 to 2019.

CAQ Executive Director Julie Bell Lindsay said in a news release that as a whole audit committees are supplying the marketplace with more clarity about their activities, but she added, “We urge audit committees to consider the opportunities to enhance transparency.”

Those opportunities, according to the report, include:

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

Research & References of How audit committees can improve disclosure|A&C Accounting And Tax Services
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