CAQ Snapshot: February 2016
Monday, February 29, 2016
CAQ Releases Cybersecurity Resource
U.S. public company auditors can play an important role regarding cybersecurity. A new CAQ resource, Understanding Cybersecurity and the External Audit, succinctly explains that role in two important contexts: the audits of financial statements and internal control over financial reporting, and disclosures.
Targeted at boards, audit committees, investors, company management, and other market stakeholders, the resource answers key questions. For example, in a company’s IT environment, where do public company auditors focus their attention? “The auditor’s primary focus is on the controls and systems that are in the closest proximity to the application data of interest to the audit,” explains the document. “That is, systems and applications that house financial statement-related data.”
As is true in many sectors of the economy, cybersecurity is a priority issue for the public company auditing profession and the CAQ. In addition to shedding light on the auditor’s current role, the CAQ continues to work closely with counterparts at the American Institute of CPAs on exploring how that role might evolve.
Diversity Critical to Effective Board Governance, Says CAQ Letter
The composition of corporate boards should include diverse skill sets, experience, and backgrounds to enable a multidisciplinary approach to risk oversight, said the CAQ in a recent comment letter to the International Corporate Governance Network (ICGN). The CAQ made its comments in response to an ICGN Member Consultation, Guidance on Diversity on Boards.
To achieve such diversity, the CAQ expressed support for a principles-based approach, rather than prescriptive mandates. It also emphasized the importance of diversity-related disclosure to investors. “Corporate disclosure of diversity information related to board composition and member selection would provide context for discussion and engagement between shareholders and boards on diversity,” said the letter.
“Profession in Focus” Features PCAOB’s Franzel, Audit Analytics’ Cheffers
The CAQ added to its “Profession in Focus” video series with two February episodes. In the first, Jeanette M. Franzel, Board Member at the Public Company Accounting Oversight Board (PCAOB) discussed priorities for the PCAOB, its engagement with audit committees, and its successful scholarship program for accounting students. “We’ve got a lot of good things happening at the PCAOB, which should positively impact audit quality,” said Franzel.
In the following episode, Mark Cheffers, CEO and founder of Audit Analytics, provided thoughts on the Audit Committee Transparency Barometer. A joint publication from the CAQ and Audit Analytics, the Barometer tracks how U.S. audit committees approach the public communication of their financial reporting oversight activities.
CAQ Welcomes Maryland Students
On February 5, the CAQ hosted accounting undergraduates from the University of Maryland’s Robert H. Smith School of Business. The students heard presentations from CAQ staff and discussed top policy issues, CAQ initiatives, and the benefits of careers in the auditing profession.
The CAQ engages regularly with academic programs, both on campus and in Washington, DC. For more information, please contact Margot Cella, the CAQ’s Director of Research.
Save the Date for “The Audit Committee of the Future”
What should the composition of future audit committees look like? On April 12, a group of experts will discuss at an event co-hosted by the CAQ and the John L. Weinberg Center for Corporate Governance of the Alfred Lerner College of Business & Economics at the University of Delaware.
As audit committees confront new risks, market complexities, and regulatory scrutiny, some are calling for a fresh look at the definition of an audit committee “financial expert,” as well as a reexamination of the number of financial experts required for boards. The panel will explore these and other issues, along with possible challenges and paths forward.
Taking place on campus in Newark, DE, the program will run from 9:30 a.m. to 12:00 p.m., with a complimentary lunch following the event. Full event details, including registration, will be forthcoming. For questions or more information, please contact Erin Dwyer, CAQ Senior Director of Stakeholder Engagement, or Louisa Cresson, Assistant to the John L. Weinberg Center.