Opportunities to Enhance Audit Committee Disclosure Highlighted in New CAQ/Audit Analytics Report
Wednesday, November 6, 2019
Washington, DC – Although growth has been steady in the amount of information provided in audit committee disclosures, significant opportunities continue to exist to enhance transparency in this area, according to the 2019 edition of the Audit Committee Transparency Barometer. A report issued jointly by the Center for Audit Quality (CAQ) and Audit Analytics, the Barometer tracks S&P Composite 1500 proxy disclosures to gauge transparency around audit committee oversight of the external auditor and other key financial reporting topics.
“Audit committees play an essential role in audit oversight and quality, and as a whole they are providing the marketplace with more and more clarity about their activities,” said CAQ Executive Director Julie Bell Lindsay. “We urge audit committees to consider the opportunities to enhance transparency. Our latest edition of our Audit Committee Transparency Barometer provides both concrete ideas for improvement and real-world examples from small, medium, and large companies.”
As in past years, the Barometer shows positive developments in 2019. Several areas of disclosure have reached robust levels, including discussion of non-audit services (e.g., 84 percent of S&P 500 companies) and length of auditor tenure (e.g., 71 percent of S&P 500 companies). The report also highlights for the first time that cybersecurity has become a disclosure hotspot, with double-digit increases since 2016 in the amount of information available on cybersecurity risk oversight and other topics.
Yet, as the Barometer reveals, there are signs that disclosure efforts are slowing, based on year-over-year growth, and disclosure levels in some areas remain low. The Barometer points to several opportunities where audit committees can enhance transparency, including disclosure around significant areas of discussion between the audit committee and external auditor, auditor evaluation and engagement partner selection, and compensation.
“Now in its sixth year, the Audit Committee Transparency Barometer is an outstanding resource to help investors and other market stakeholders track and understand trends in audit committee disclosure,” said Michael Nohrden, CEO of Audit Analytics. “We are pleased to partner with the CAQ to provide insights and areas for action in audit committee transparency.”
In addition to presenting statistics on disclosure trends, the Barometer offers disclosure examples to illustrate how audit committees are enhancing information for investors and others. Featured companies include, among others, CVS Health, JetBlue Airways, and Visa.
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About the CAQ
The Center for Audit Quality (CAQ) is an autonomous public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high-quality performance by public company auditors; convenes and collaborates with other stakeholders to advance the discussion of critical issues that require action and intervention; and advocates policies and standards that promote public company auditors’ objectivity, effectiveness, and responsiveness to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs. For more information, visit thecaq.org.
About Audit Analytics®
Audit Analytics is an independent research provider that enables the accounting, legal, and investment communities to analyze auditor market intelligence, public company disclosure trends, and risk indicators. For more information, please e-mail firstname.lastname@example.org or call 508-476-7007.
Andrew T. Gillies
Center for Audit Quality