Closing the Transparency Gap: Aligning Audit Committee Actions with Disclosures

Public companies have been operating in a state of transformation driven by the explosion of artificial intelligence, changing macroeconomic conditions, and evolving regulatory priorities. In response, oversight responsibilities of the audit committee are evolving to include emerging risk areas, in addition to oversight of financial reporting and the external auditor.

Now in its 12th year, the 2025 Audit Committee Transparency Barometer, produced in collaboration with Ideagen Audit Analytics, provides a comprehensive look at how audit committees of S&P 1500 companies are communicating their oversight responsibilities to investors. By analyzing these disclosure trends and layering sentiments from audit committee members themselves captured in the Audit Committee Practices Report, a distinct theme emerges: while audit committees play an essential role in overseeing key areas, their proxy disclosures are largely stagnating. This “transparency gap” presents an opportunity for audit committees to better tell their story.

Oversight of the External Auditor: The Need for Tailored Disclosures

Investors want to understand how the audit committee oversees the external auditor including audit firm selection, compensation, evaluation and supervision, and engagement partner selection. However, tailored disclosures in this area have plateaued.

The following data from the Barometer highlights this stagnation in a few key areas:

• 50% of S&P 500 companies discuss considerations for appointing the external auditor, a figure that remains unchanged from 2024.
• Disclosure of audit committee involvement in selecting the external audit partner remained stagnant year-over-year at 53%.

Tailored disclosure is always important, but during disruption and rapid change, committees should be especially transparent.

“The persistence of standard language may stem from a combination of legal conservatism and resource constraints. However, by defaulting to standard language, audit committees miss the opportunity to highlight the robust, tailored evaluation processes that committees are conducting behind closed doors.”

– Marie Pupecki, Ideagen Audit Analytics

Where Disclosure Matches Audit Committee Priorities

While disclosures regarding core oversight areas have somewhat plateaued, disclosure rates related to audit committee oversight of emerging risk areas remain consistent with audit committee priorities. This is an example of one area where the “transparency gap” is closing.

The Audit Committee Practices Report singles out cybersecurity as the number one priority for audit committees over the next 12 months. The report also noted that 62% of audit committees had primary oversight of cybersecurity risk.

This priority is reflected in disclosures. In the report, 64% of S&P 500 companies explicitly state that the audit committee is responsible for cybersecurity oversight. Disclosing whether it is the audit committee’s responsibility to oversee cybersecurity provides investors with further transparency into how the company approaches governance of this risk area.

The “Skills Matrix” as a Standard

A positive trend in governance disclosure is the prevalence of the board skills matrix, which provides insights into both board composition and competency.

90% of S&P 500 companies disclose a skills matrix, up from 85% in 2024 and is responsive to investors’ desire to understand the composition of the board and the expertise that each member brings.

“What makes the skills matrix particularly effective is that it transforms abstract claims about board expertise into concrete, comparable data points. The template is now established for future competency categories, and AI governance is the obvious next addition. As companies face increasing investor questions about AI strategy, risk management, and ethical deployment, boards will need to explicitly demonstrate who brings AI-relevant expertise to these critical oversight discussions.”

– Marie Pupecki

Looking Ahead

Here at the CAQ, we know that transparency builds trust in capital markets. As audit committees navigate 2026 and beyond, the proxy statement remains an excellent opportunity to tell their story.

“The most effective audit committees treat disclosure as a strategic communication opportunity, not a compliance burden. Data-driven benchmarking allows boards to move beyond guesswork and understand where they stand relative to peers on critical transparency measures. Whether it’s auditor oversight, risk management, or emerging issues like AI governance, committees that use benchmarking data can make informed decisions about where to enhance their disclosure and ensure they’re telling their governance story as effectively as they’re doing the work.”

– Marie Pupecki

Explore more data from the Audit Committee Transparency Barometer and dive deeper into what the data reveals about today’s evolving governance landscape. For additional support for audit committee members, check out our Audit Committee Resource Center for the latest updates.