CAQ Snapshot: March 2018

Thursday, March 29, 2018

CAQ Roadmap Can Help Audit Committees Enhance Oversight of Non-GAAP Measures

A new report from the Center for Audit Quality (CAQ) finds that companies and investors can benefit from increased audit committee oversight of those financial measures that do not conform to US Generally Accepted Accounting Principles (GAAP). Presenting themes that emerged at a series of roundtables, Non-GAAP Measures: A Roadmap for Audit Committees provides a set of key considerations for audit committees, including leading practices to assess whether a company’s non-GAAP metrics present a balanced representation of the company’s performance.

Non-GAAP Measures: A Roadmap for Audit Committees“GAAP information serves as a foundation for confidence in financial statements, but financial statement users also value non-GAAP financial measures, when presented appropriately,” said CAQ Executive Director Cindy Fornelli in a statement. “Our roadmap can help audit committees improve and advance their oversight of and involvement with non-GAAP measures, to the benefit of companies and investors.”

Held in 2017, the CAQ’s non-GAAP roundtables brought together audit committee members, management, investors, securities lawyers, and public company auditors. Participants explored GAAP as the “bedrock” of financial information, why companies present non-GAAP measures, challenges related to non-GAAP measures, the role of the external auditor, the importance of dialogue in fostering good judgment, and other relevant topics.

In addition to the roadmap, the CAQ has released a companion video, featuring interviews with audit committee chairs, that provides additional context and real-life examples of how audit committees are thinking about and overseeing non-GAAP measures.

Fornelli: Equality Is Excellence

How does the public company auditing profession press for progress toward women’s equality? In a post to celebrate International Women’s Day, the CAQ’s Cindy Fornelli highlighted several ways, including extraordinary leaders (women and men), extraordinary workplaces, and an extraordinary focus on achieving excellence.Equality is Excellence

“The CPA profession has made clear that equality is excellence,” wrote Fornelli. “We in accounting and auditing now need to keep pressing for progress in the same way that has defined the profession and made it a bedrock foundation for our economy and markets.”

Each month throughout 2018, the CAQ is highlighting the values and principles that enable the public company auditing profession to serve as a bedrock foundation for investor confidence and capital markets. Following the theme of “excellence” during the month of March, the CAQ will highlight “sustainability” in April. On social media, follow along and join the conversation using #BuildingaBedrock.

CAQ-Sponsored Report Shows Ethics and Compliance Progress and Challenges

Rates of observed misconduct in US workplaces are on the decline, according to a new report, State of Ethics & Compliance in the Workplace. Produced by the Ethics & Compliance Initiative (ECI)—and co-sponsored by the CAQ—the report presents findings from ECI’s Global Business Ethics Survey.

Ethics reportIn 2017, 47 percent of employees said they had observed conduct that either violated organization standards or the law, which the report says is “close to a historic low.”

ECI’s report also reveals challenges. For example, rates of retaliation for reporting wrongdoing have doubled in recent years. To address such challenges, according to the report, organizations should take steps such as prioritizing ethics and compliance, promoting strong values, and reinforcing the importance of culture among managers.

IPTF Committee Releases Aid for Monitoring Inflationary Economies

The CAQ’s International Practices Task Force (IPTF) has released a IPTF Reportframework for compiling and monitoring inflation data. The information contained in the publication may be helpful to company management in applying technical literature, in conjunction with internal controls over financial reporting, to reach a conclusion on whether a country’s economy should be considered highly inflationary. To learn more about the IPTF, visit its page on the CAQ website.

 

Join the CAQ at These Upcoming Events

National Association of Corporate Directors Global Cyber Forum
We look forward to seeing our corporate director colleagues at the Global Cyber Forum, where we’ll examine leading board oversight practices and practical, actionable items that board members and management can effectively implement to help defend their companies against cybersecurity risks from around the globe.
April 17–18; Geneva, Switzerland

Accounting & Financial Women’s Alliance (AFWA) Public Relations Lunch
The CAQ’s Catherine Ide, Managing Director of Professional Practice and Member Services, will speak at the AFWA’s public relations lunch on how the public company auditing profession is innovating for the benefit of investors, companies, and the capital markets.
April 24; Chattanooga, Tennessee

Sustainability Investment Leadership Conference
Join the discussion about good governance, environmental sustainability, and social stewardship at the Sustainability Investment Leadership Conference.
May 2; New York, New York

Women Corporate Directors (WCD) Global Institute
We look forward to seeing our director colleagues at the WCD Global Institute. CAQ Executive Director Cindy Fornelli will moderate a panel on “Decision Making in the Visionary Boardroom.”
May 9–11; New York, New York

Deloitte/University of Kansas Auditing Symposium
Join the CAQ at the Deloitte and University of Kansas Auditing Symposium. On May 17, Cindy Fornelli will moderate the panel “Innovations in Auditing,” which will also feature speakers from Deloitte, Grant Thornton, and the Public Company Accounting Oversight Board.
May 17–19; Lawrence, Kansas

Teachers of Accounting at Two-Year Colleges Conference
The CAQ is pleased to support the Teachers of Accounting at Two-Year Colleges Conference. Crystal Cooke, CAQ Senior Project Manager, will moderate the panel “Building Bridges to the Future,” with panelists Sidney Askew, Community College Professor and President of the Two-Year College Section of the American Accounting Association; Tom Marsh, Assistant Dean & Associate Professor of Accounting, Northern Virginia Community College; and Julie Peters, US University Relations Leader, PwC.
May 17–19; Tampa, Florida

Financial Executive International (FEI) 2018 Financial Leadership Summit
Mark your calendars for FEI’s 2018 Financial Leadership Summit, taking place in Houston. Led by top experts and business leaders, conference sessions will cover emerging financial risks, advanced data analytics, the C-suite of the future, implementing the new lease accounting standard, and other important topics. Friends of the CAQ receive a $200 discount on registration using the code CAQ18.
May 20­–22; Houston, Texas