Largely reflecting the dramatic increases in voluntary disclosure since 2012 about the audit committee's practices and accountability, EY's latest report: "Audit committee reporting to shareholders in 2020" reveals these (among other) key takeaways based on the firm's tracking and analysis of Fortune 100 proxy statements filed since 2012:
- 64% of companies disclosed the factors considered by the audit committee when assessing the external auditor's qualifications and work quality - up from 16% in 2012.
- Nearly 80% of companies disclosed that the audit committee was involved in the selection of the lead audit partner, compared to 0% in 2012.
- Nearly 90% of companies disclosed that the audit committee considers non-audit fees and services when assessing auditor independence, compared to just 19% in 2012.
- 40% of companies stated that the audit committee is responsible for fee negotiations with the auditor - up from 1% in 2012.
The graphics on page 3 of the report detail results by year. In addition, the report includes sample instructive disclosures on several key topics including factors used in the audit committee's assessment of the external auditor and work quality, the audit committee's consideration of alternatives to retaining the current auditor, and the audit committee's discussion of CAMs with the external auditor.
EY poses several questions for audit committees to consider that are worth deliberation in the context of their commonly expanding oversight responsibilities that may include ERM, cybersecurity, and other topics, including whether and to what extent the changes in the committee's role are being communicated to investors and other stakeholders.
Access additional information & resources on our Audit Committees page. This post first appeared in the weekly Society Alert!