Audit committees are providing investors with more information about their outside auditing firms, according to a new report.

The annual report, from the Center for Audit Quality and Audit Analytics, sees the amount of information disclosed about audit committee oversight of external auditors continuing to increase since last year.

The fourth annual Audit Committee Transparency Barometer found 37 percent of S&P 500 companies’ proxy statements this year provided an extended discussion of the audit committee’s considerations when recommending the appointment of the audit firm, up from 13 percent in 2014. In addition, 24 percent of mid-cap companies offered an enhanced discussion in 2017 of the audit committee’s considerations in recommending the appointment of the audit firm (up from 10 percent in 2014). That compared to 17 percent of small-cap companies this year (an increase from 8 percent in 2014).

Audit committee disclosures of use of an outside audit firm

The report found 38 percent of S&P 500 companies disclosed the evaluation or supervision of the audit firm this year, a jump from just 8 percent in 2014.

On top of that, 28 percent of mid-cap companies disclosed the evaluation or supervision of the audit firm in 2017 (a big jump from 7 percent in 2014). That compares to 27 percent of small-cap companies in 2017 (up from 15 percent in 2014).

“For the fourth year in a row, audit committees have continued to enhance transparency around their oversight of the external auditor by voluntarily and broadly increasing disclosure,” said CAQ Executive Director Cindy Fornelli in a statement.

Each year since 2014, the Barometer has measured the strength of proxy disclosures among companies in the S&P Composite 1500. This index looks at S&P 500 companies (large-cap companies), the S&P MidCap 400 and the S&P SmallCap 600.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access