Accountants are garnering more power and seats on corporate board audit committees, but their numbers still remain relatively low, according to a newly released report.
The number of accountants sitting on audit committees has doubled from 6 to 12 percent between 2002 and 2006, said a report from Huron Consulting Group. In 2006, 23 percent of all audit committee chairs were listed as accountants, up from less than 10 percent in 2002. The report was based on a sample of 670 audit committee members at 164 public companies.
The number of audit committees with at least one accountant rose from 21 percent in 2002 to 40 percent in 2006. Nevertheless 98 of the 164 companies in the sample did not have any accountants on their audit committees. And only 22 percent of the designated financial experts on the audit committees had biographies indicating they had accounting backgrounds in 2006. That represented a slight decline from 2005.
Many of the audit committee members have financial backgrounds rather than accounting backgrounds. Audit committee members who are finance professionals exceeded accountants by less than a 3-to-1 ratio in 2006, compared to a 5-to-1 ratio in 2002. Audit committee members who were considered either accountants or finance professionals rose from 34 percent in 2002 to 47 percent in 2006, but half of all the audit committee members still fell into a different category.
Even the audit committee "financial experts" often did not have either accounting or finance experience. Huron found that 34 percent of audit committee financial experts appeared to lack either an accounting or finance background in 2006. The report noted, however, that the companies may not have provided complete disclosure of their backgrounds and that the SEC gives companies and boards some latitude in selecting the qualifications of financial experts.
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