Report Reveals Audit Committee Disclosures in Proxy Statements Continue to Increase
Wednesday, November 10, 2021
Public company disclosures increased in several areas – including cybersecurity and non-audit services – while opportunities remain to increase transparency for the benefit of investors
Washington, DC (November 10, 2021) – New data from the Center for Audit Quality and Audit Analytics’ report, 2021 Audit Committee Transparency Barometer, shows that overall audit committees continue to increase their disclosures in proxy statements. This has significant implications for investors, as the oversight role of independent audit committees is vital to investor protection and is positively associated with audit quality.
The report, now in its 8th year, found that the most dramatic increase continues to be disclosure of audit committee responsibility for cybersecurity risk oversight, from 11% of S&P 500 companies in 2016 to 46% of S&P 500 companies in 2021, which can be attributed to rising cybercrime and trends towards remote work that have exposed new vulnerabilities. Other increased disclosures identified in the 2021 Barometer include audit committee oversight of non-audit services, auditor tenure, criteria considered to evaluate the audit firm and involvement in audit partner selection.
“We are pleased to see that the positive, long-term trend of increased audit committee disclosures in public company proxy statements has continued,” said Julie Bell Lindsay, Chief Executive Officer of the Center for Audit Quality. “Investors do not always have insight into the oversight activities that audit committees perform, which is why these disclosures are so important.”
The Barometer analyzes S&P Composite 1500 proxy disclosures to understand transparency around audit committee oversight of the external auditor and other key audit-related topics. This year’s report provides examples of effective disclosure from companies including MetLife, Darden Restaurants and KeyCorp.
Despite the increases in disclosures observed, the CAQ believes there remains several opportunities for audit committees to further increase their disclosures, particularly around oversight of audit firm compensation, including fee negotiations, connection to audit quality, and changes in fees.
“The Audit Committee Transparency Barometer continues to be the only resource of its kind for audit committees and other stakeholders, providing them with comprehensive data across the S&P 1500 related to the audit committee,” said Michael Nohrden, CEO of Audit Analytics. “We are pleased to continue our partnership – now in its eighth year – with the CAQ in developing this important tool.”
Review the report, 2021 Audit Committee Transparency Barometer, here.
###
About The Center for Audit Quality
The Center for Audit Quality (CAQ) is a nonpartisan public policy organization serving as the voice of U.S. public company auditors and matters related to the audits of public companies. To achieve our mission, we: promote high-quality performance by U.S. public company auditors; convene capital market stakeholders to advance the discussion of critical issues affecting audit quality, U.S. public company reporting, and investor trust in the capital markets; and informed by independent research and analyses, champion policies and standards that bolster and support the effectiveness and responsiveness of U.S. public company auditors and audits 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, email info@auditanalytics.com or call 508-476-7007.
Press Contact:
Julia Germain
Manager of Communications
jgermain@thecaq.org
703.675.6077
Does Audit Committee Disclosure of Partner-Selection Involvement Signal Greater Audit Quality? Jimmy F. Downes; Michelle A. Draeger; Abbie E. Sadler (February 2021)