Audit Committee Transparency Barometer shows positive trends, but room to improve
Ideagen and the Center for Audit Quality (CAQ) have today released the 10th annual Audit Committee Transparency Barometer Report.
The report found that, while audit committees continue the trend of increasing disclosures in key areas of traditional financial oversight, as well as in emerging areas of responsibility, there's still room for improvement.
Speaking about the report, Marie Pupecki, Ideagen Senior Accounting Research Analyst, said: “Ten years in, the Transparency Barometer continues providing insights into the deliberations of audit committees and how they exercise their responsibilities.
“This report serves as an important tool for boards and the public to track and compare audit committee disclosures in the S&P 1500.”
Because this year marks the 10th anniversary of the annual report, the data gathered provides a macro-level view of public company transparency over the last decade, as well as disclosure trends in evolving areas such as cybersecurity and ESG.
While the report finds improvement in disclosure on a host of important issues, it also argues for increased disclosures to improve audit committee transparency for investors and other capital market stakeholders. This year, the report identifies several opportunities for audit committees to enhance disclosures regarding audit fees, particularly the audit committee’s responsibility for fee negotiations, as well as how audit committees consider auditor tenure and engagement partner selection.
“Improved audit committee disclosures serve an important role in promoting audit quality and auditor independence as well as meeting investor expectations,” said Julie Bell Lindsay, Chief Executive Officer, CAQ.
“We are pleased to see disclosure trends increasing but also encourage audit committees to do more in sharing how they approach their important oversight responsibilities.”
Some key toplines of the report include:
- Disclosures of the fact that audit committees are responsible for cybersecurity risk oversight and ESG rose by as much as 50% in the last year.
- These new responsibilities also require expanded skill sets from audit committee members. Notably, we have seen changes in the audit committee’s composition, in terms of members and expertise, and responsibilities.
- Areas with room for improved disclosures include how the audit committee considers the tenure of the external auditor, how audit committees are involved in selecting the external audit engagement partner, and discussions of audit fees.
The full report is available to read HERE