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The jointly-released CAQ/Ideagen Audit Analytics: “Audit Committee Transparency Barometer – 10^th Anniversary Edition” (online here) reveals, in addition to 10-year trend data, these (among other) upticks in voluntary audit committee disclosure practices and associated examples of effective disclosure based on S&P 1500 proxy statements filed from July 1, 2022 - June 30, 2023.

Cybersecurity oversight. Consistent with heightened risk and stakeholder scrutiny, cybersecurity oversight disclosure continues to measurably increase. 59%, 50%, and 40% of S&P 500, S&P MidCap, and S&P SmallCap companies, respectively, disclosed in their 2023 proxies the audit committee's responsibility for cyber risk oversight - up from 54%, 41%, and 32%, respectively, in 2022, and 11%, 5%, and 4%, respectively, in 2016.

See disclosure examples 7 and 8 on pages 22-23 in Appendix II.

Audit committee's considerations in (re)appointing the external auditor. 49%, 36%, and 26% of S&P 500, S&P MidCap, and S&P SmallCap companies, respectively, disclosed in their 2023 proxies the audit committee's considerations in (re)appointing the external auditor, up from 46%, 32%, and 24%, respectively, in 2022, and 13%, 10%, and 8%, respectively, in 2014. See disclosure examples 1 and 2 on pages 15-18 in Appendix II.

Frequency of evaluation. 38%, 24%, and 19% of S&P 500, S&P MidCap, and S&P SmallCap companies, respectively, disclosed that the evaluation of the external auditor is conducted at least annually (best practice), up from 35% and 20% for S&P 500 and S&P MidCap, respectively, in 2022 (prevalence was flat for S&P SmallCap), and 4%, 3%, and 4%, respectively, in 2014. See disclosure examples 1 and 2 on pages 15-18 in Appendix II.

ESG oversight. Last year’s report featured new questions relating to ESG oversight and expertise. 29%, 17%, and 12% of S&P 500, S&P MidCap, and S&P SmallCap companies, respectively, disclosed that the audit committee is responsible for ESG oversight, compared to 18%, 10%, and 7% in last year’s report. See disclosure examples 9 and 10 on pages 23-24 in Appendix II.

Appendix II of the report includes additional sample disclosures; Appendix III provides a sample leading practice audit committee matters and report disclosure; and Appendix IV includes questions for audit committees to consider in relation to enhancing disclosure in this area.

See the CAQ’s release and additional resources on our Audit Committees and Annual Meeting/Proxy Statement pages.

                          This post first appeared in the weekly Society Alert!