Audit committees have stagnated or declined in many areas of disclosure, highlighting a need for more disclosure, according to a new report.
The Center for Audit Quality and Ideagen Audit Analytics released their annual
"When disruption accelerates, disclosures cannot stand still," said CAQ CEO Julie Bell Lindsay, in a statement. "Meaningful, investor-focused disclosure is one of the most powerful tools audit committees have to tell their story and demonstrate this important role. Each proxy season presents an important opportunity for audit committees to more clearly communicate how they oversee risk and uphold audit quality, strengthening investor confidence in a rapidly changing environment."
According to the report, 90% of S&P 500 companies disclosed their board of directors' skills matrix, and 65% of those boards disclosed that they have a cybersecurity expert, with both figures reflecting five-point increases from the prior year. Other areas of high disclosure rates among the S&P 500 include how non-audit services may impact independence (85%), and length of auditor tenure (75%).
However, other areas of disclosure showed stagnation, including for S&P 500 companies. The disclosure of the annual evaluation of the external auditor decreased one point from 39% to 38%; considerations in appointing or reappointing the external auditor remained unchanged at 50%; and factors contributing to the selection of the audit partner decreased one point from 17% to 16%.
"As audit committee responsibilities continue to expand, the Audit Committee Transparency Barometer provides critical insights into how committees are adapting their disclosures and where there is room for improvement," Michael Nohrden, vice president of strategy audit and risk for Ideagen, said in a statement. "Our ongoing collaboration with the CAQ ensures audit committees have access to robust data and peer comparisons across the S&P 1500, empowering them to strengthen their communications with stakeholders. With emerging risks like AI adoption and cybersecurity threats reshaping oversight responsibilities, transparent disclosure has never been more important."
