For the last five years, the Center For Audit Quality (CAQ) has published its Audit Committee Transparency Barometer, which benchmarks the voluntary disclosures provided by today’s audit committees. What improvements have been made across the S&P 1500 over the last five years? What kind of engagements are today’s investors expecting from audit committees?
In this episode, Erin Dwyer, Managing Director of Stakeholder Engagement & Communications for the Center for Audit Quality, shares highlights from the report and discusses the dynamics between today’s audit committees and institutional investors.
Most of your viewers would probably agree that director-investor engagement is at an all-time high, but I don’t think this is the case with audit committees. Now, I don’t think [audit committee chairs] are sitting home feeling envious of the lead director or compensation committee chairs, [who] are getting called into these meetings by large institutional investors–but I think they recognize that it’s worthwhile for them to engage with investors and vice versa.
According to the 2018 Audit Committee Transparency Barometer, voluntary audit committee disclosures are improving in several key areas, including audit firm selection and compensation. Recently, the CAQ hosted a roundtable between large U.S.-based asset managers and audit committee chairs to bridge the gap and further understand what today’s investors are requesting from audit committees:
“What the asset managers wanted to talk to the audit committees about,” explained Dwyer, “was their role in risk oversight outside of the financial statement reporting–[particularly] in a year where the headlines have been largely around #MeToo and other cultural failings…How [are] audit committees overseeing culture? What [is] their risk oversight role in cyber [risk]? How [are] they looking at business continuity?”
The original episode can be viewed here.