Financial services audit committee members say that the implementation of Sarbanes-Oxley Section 404 is the most pressing issue they face, according to a survey by PricewaterhouseCoopers.

Outside of Sarbanes- Oxley, the majority of audit committee members' time is spent on regulatory compliance (20 percent), risk management (14 percent), strategic planning (13 percent) and discussing the industry and competition (13 percent), according to a poll of more than 200 audit committee members conducted this month at the annual Financial Services Audit Committee Forum in New York.

"One of the key decisions that management and the audit committee, along with appropriate input from the external auditor, may need to make is the judgment call between what is a significant deficiency versus a material weakness, as often the differences are subtle," commented Tim Ryan, partner and U.S. financial services leader at PricewaterhouseCoopers.

In addition, 85 percent of those polled confirm increased expectations of the external auditor. Sixty-seven percent of audit committee members surveyed place "great importance" on the value of external auditors on the topic of earnings management, while 46 percent also place "great importance" on the value of external auditors in the area of compliance.

When asked how their relationship with internal audit has changed, 39 percent of respondents cite more frequent communications between internal audit and the audit committee as the most significant change, while 33 percent feel that the most significant change has been a more direct line to the audit committee.

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