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Audit Committees: Significant Rise in Voluntary Disclosures

By Randi Morrison posted 08-08-2017 08:55 AM

  
Seemingly responsive to investor demand for information about the audit committee's practices and accountability, EY's latest report on voluntary audit committee disclosures: "Audit Committee Reporting to Shareholders in 2017" reveals these (among other) dramatic improvements in voluntary disclosure based on an analysis of the 75 Fortune 100 proxy statements that were filed each year from 2012 to 2017 for annual meetings through August 15, 2017:
  • In 2017, 56% of companies disclosed factors considered by the audit committee when assessing the qualifications and work quality of the external auditor - up from 48% in 2016, and 17% in 2012.
  • 75% of companies in 2017 disclosed that the audit committee was involved in the selection of the lead audit partner, compared to 69% in 2016 and just 1% in 2012.
  • In 2017, 87% of companies stated that the audit committee is responsible for the appointment, compensation and oversight of the external auditor, up from 81% in 2016 and 45% in 2012.
  • 84% of companies disclosed that the audit committee considers non-audit fees and services when assessing auditor independence, compared to just 15% in 2012.
  • 32% of companies stated that the audit committee is responsible for fee negotiations with the auditor in 2017 - up from 27% in 2016 and zero in 2012.
Also responsive to investor interest, EY reviewed select committee member attributes. Among other findings: Comparing 2017 to 2012, financial experts and women are increasingly represented on audit committees; the percentage of financial experts increased from 59% to 66%, and the percentage of women increased from 19% to 26%, over that time period.


The table on page 4 of the report details results by year. In addition, the report includes sample instructive disclosures on several key topics on page 5.

          See also our prior reports: Enhanced Audit Committee Disclosure Benchmarking, Voluntary Disclosure Increases: Audit Committee Oversight of External Auditor, Audit Committees: Continued Rise in Voluntary Disclosures, and "SEC Issues Audit Committee Disclosure Concept Release," and additional resources on our Audit Committees topical page.
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