Snapshot | February/March 2022
Wednesday, March 30, 2022
March may have come in like a lamb, but this year is shaping up to be anything but. Kickoff the new season by forwarding this newsletter to a colleague.
SEC Proposes Mandatory Climate Disclosures
This month the SEC released its much-anticipated proposal on disclosure of climate-related risks by public companies. This represents a major step in giving both companies and investors clarity around information that investors have increasingly asked for and companies are in many respects already providing to the capital markets.
This is a major proposed change to corporate reporting in the United States and there are going to be many perspectives on how to move forward. Our CEO, Julie Bell Lindsay, reacts to the proposal.
Demonstrating the Value of Public Company Auditors: 2022 Outlook
Speaking of SEC proposals, 2022 is shaping up to be an important year for public company auditors. From ESG to the 20th anniversary of SOX, the CAQ sees several key areas of opportunity for the profession:
- Enhancing trust and transparency in public company auditors’ ability to produce high-quality audits
- Responding to increasing demand for assurance over climate-related and other environmental, social and governance information (ESG)
- Assisting all key stakeholders in the detection and deterrence of financial reporting fraud
- Building a more diverse pipeline of talent into accounting and auditing and foster best practices in retaining diverse auditors
This is all in furtherance of our mission: to promote-high quality performance by U.S. public company auditors.
Read our CEO Julie Bell Lindsay’s full outlook here.
Audit committees dealing with increased complexity, “scope creep”
A report from the CAQ and Deloitte’s Center for Board Effectiveness, Audit Committee Practices Report: Common Threads Across Audit Committees, provides an illuminating snapshot about how audit committee oversight is changing. In particular, the report shows that while nearly all respondents (96%) rank financial reporting and internal controls — including fraud risk – as their top priority, audit committees are also responsible for cybersecurity (53%), data privacy security (48%), ethics and compliance (48%), third-party risk (47%) and enterprise risk management (42%).
Audit quality remains high. The survey also demonstrates that audit quality among public companies remains high – 98% of respondent stated audit quality either increased or remained the same as the previous year – and that competence of the engagement team and strong communication between the engagement partner and the audit committee contribute most to audit quality.
Check out the full report to see what topics are on the agenda, what experts audit committees have and anticipate needing, how much time is spent on meetings, and how respondents are thinking about emerging topics such as ESG.
The CAQ Celebrates Women’s History Month
Women are helping to lead the way for public company auditors in our evolving profession. Hear from leaders at public company audit firms on how they’re helping the profession to evolve:
ESG in a Changing World
Maura Hodge, KPMG’s National ESG Assurance Leader, describes the role auditors can play in providing assurance on company-prepared ESG information.
The Importance of Diversity in Accounting
We spoke with two audit partners, Jackie Gordon at KPMG and Danica Dilligard at EY, about their journey to becoming partner and what diversity and inclusion within the public company audit profession means to them.
ICYMI: Leading the Headlines
- Cybersecurity increasingly on audit committee agendas, (CFO Dive)
- Audit quality stable amid pandemic, audit committee members say, (Journal of Accountancy)
- PwC’s Tim Ryan Tapped to Lead CAQ Governing Board, (CPA Practice Advisor)
- The SEC proposed a landmark climate disclosure rule. Here’s what to know, (Washington Post)
- Companies Brace for Higher Compliance Costs as SEC Proposes Climate Change Disclosures, (Wall Street Journal)