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CAQ Snapshot: September 2015

Tuesday, September 29, 2015

CAQ Survey: Investor Confidence in U.S. Capital Markets Stays Strong

U.S. retail investors continue to have robust confidence in U.S. capital markets, even as they are increasingly leery of capital markets abroad, according to the Center for Audit Quality’s 2015 Main Street Investor Survey

Catherine M. Engelbert, CEO of Deloitte LLPThe survey finds that 73 percent of “Main Street” investors have confidence in U.S capital markets, holding steady from 2014 levels and up 12 percentage points from a low following the financial crisis. By contrast, confidence in non-U.S. capital markets decreased from 43 percent in 2014 to 38 percent in 2015, edging closer to the lowest level recorded on that measure since the CAQ launched the survey in 2007.

“Our 2015 survey results paint a fascinating picture of the American retail investor,” said CAQ Executive Director Cindy Fornelli in a video accompanying the survey’s release. “Despite sometimes nerve-wracking fluctuations in the marketplace, our survey shows that U.S. investor confidence is resilient, a positive sign given the importance of financial markets as engines of economic growth.”

When asked how much confidence they have in a number of different entities that look out for investors, survey respondents express the most trust in independent auditors (76 percent), financial advisors and brokers (73 percent), and independent audit committees (71 percent).

With an overarching theme of the “Investor of the Future,” this year’s Main Street Investor Survey highlights attitudes among millennial investors–those between the ages of 18 and 34. The report finds that confidence levels and financial views of these younger investors largely mirror those of previous generations. Still, notable divergences also exist. Millennials, for example, are more likely than others to view cyber-attacks as the biggest risk to their investment portfolio.

Visit the CAQ website to find the full report, as well as supplemental data for all investors and millennials. And don’t miss media coverage of the survey, as well as Fornelli’s survey-related commentary on LinkedIn and in The Hill

CAQ Weighs in on SEC’s Audit Committee Disclosure Concept Release

The best route to promote informative and relevant audit committee disclosures is through the encouragement of a voluntary, market-driven approach, said the CAQ in a September comment letter to the U.S. Securities and Exchange Commission (SEC). The CAQ filed its comment in response to the SEC’s concept release on audit committee disclosure.

“The continuing positive trend of enhanced audit committee disclosures informs our belief that a market-driven approach is most effective,” said the CAQ’s letter. “Adding prescriptive requirements could discourage this positive trend and stifle innovation.”

To illustrate recent trends in audit committee disclosure, the CAQ’s letter previewed data on the 2015 proxy season from a forthcoming edition of the Audit Committee Transparency Barometer, a publication produced jointly by the CAQ and Audit Analytics. “There was double-digit growth in the percentage of S&P 500 companies disclosing information in several key areas,” the letter noted.

Now Online: Panel Discussion at the Seventh Annual CAQ Symposium 

 Fornelli Urges Stakeholders to Weigh in on SEC Audit Committee Disclosure Concept Release Videos are now available for panel discussions from the CAQ’s Seventh Annual Symposium, held this year on August 9 in Chicago. Under the umbrella of the 2015 Symposium’s broader theme–The Audit and Engagement Team of the Future”–the first panel addressed the role of the auditor in light of growing interest in assurance around corporate responsibility and sustainability reporting. The second panel covered emerging technologies and data analytics.

Doughtie, Ferguson, Powers Appear on “Profession in Focus”

The CAQ added three new episodes to its “Profession in Focus” video series. Lynne M. Doughtie, U.S. Chairman and CEO at KPMG LLP, PCAOB Board Member Lewis H. Ferguson, and Crowe Horwath LLP CEO James L. Powers each joined CAQ Executive Director Cindy Fornelli for a conversation on key developments in the public company auditing profession.

Profession in FocusIn his interview, Ferguson discussed the PCAOB’s recent concept release on audit quality indicators (AQIs), including the release’s history, implications, and global context. Development of AQIs, he observed, will help to promote more dialogue around the audit and to drive competition based on audit quality among firms.

For her part, Doughtie shared reflections on moving into her present role at KPMG and why the public company auditing profession is an exciting career choice. “The next five years will be transformational,” she said. 

Powers also addressed potentially transformational developments in auditing, including the impact of big data and emerging technology. Still, he stressed the ongoing importance of focusing on core auditing fundamentals. “The key, intrinsic value with auditing is rooted in the basic principles of independence, integrity, objectivity–coupled with professional skepticism, due professional care, and competence,” he said.