New York-based Big 4 firm EY recently released its findings in a review of voluntary proxy statement disclosures by Fortune 100 companies relating to audit committees, including their oversight of the audit. According to the report, the data in this year’s study demonstrates a general continuity in terms of voluntary disclosures, with cybersecurity, data privacy, ERM and health and safety-related matters ranking among the top risks being overseen by audit committees.
Despite the percentage of companies providing voluntary disclosures having changed only slightly over the past year, EY reports a significant increase in disclosures in most categories since the firm began tracking this information in 2012. Some of the notable numbers that have emerged over that span include:
- Nearly 80% of companies in 2020 disclosed that the audit committee is involved in selecting the lead audit partner; none of these companies made such a disclosure in 2012
- Nearly 90% of companies disclosed that the audit committee considers non-audit fees and services when assessing auditor independence, compared to only 19% in 2012
- Almost two-thirds of companies consider the impact of changing auditors when assessing whether to retain the current external auditor, and 76% disclose the tenure of the current auditor – up from just 3% and 25%, respectively, in 2012
- Sixty-four percent of companies disclose factors used in the audit committee’s assessment of the external auditor qualifications and work quality, compared to only 15% in 2012
- Ninety-one percent of audit committees in 2020 report having two or more financial experts, compared with 70% in 2012
- Nearly two-thirds (64%) of respondents today include additional disclosures around risks beyond financial reporting that were being overseen by the audit committee
The EY report also includes several questions that audit committees may want to consider in the year ahead, covering topics such as the evolving role of the committee and additional voluntary disclosures to potentially include.