Audit Committees Revealing More to Shareholders

By:
Chris Gaetano
Published Date:
Sep 6, 2019
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The amount of information that audit committees disclose to shareholders has been steadily rising over the years, to the point where matters that they never would have brought up years ago have now become almost standard, according to CFO.com.

The report, authored by Ernst & Young, noted, for example, that 80 percent of audit committees in Fortune 100 companies now disclose that they selected the lead engagement partner at their auditing firm, versus 0 percent seven years ago. Other disclosures had similar leaps within the same time period, including the consideration of nonaudit fees and services when assessing independence (nearly 90 percent now versus 16 percent in 2012), and the factors by which the committee determined the external auditor's qualifications (64 versus 16 percent).

CFO.com noted that shareholders are likely to hear even more about their auditors in the future as the Public Company Accounting Oversight Board (PCAOB)'s new expanded reporting model goes into effect. Chief among the new model's features are the required disclosure of "critical audit matters" (CAMs), which are meant to outline aspects of the audit that were especially challenging or required larger degrees of personal judgment. A Deloitte analysis found that auditors for top companies report an average of 1.8 CAMs; the most frequent topic concerned goodwill and intangible assets at 35 percent, followed by revenue at 19 percent and income taxes at 15 percent. 

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