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07 October 2019
By now, we all know that, sooner or later, audit reports for most public companies will be required to disclose critical audit matters, which are intended to make the audit report more informative for investors. (See this PubCo post.) But, as this article from the EY Center for Board Matters reports, over the last several years, companies and their audit committees have gone a long way toward increasing the amount of audit-related information they provide to investors voluntarily. To carry out its assessment, EY reviewed audit-related disclosures in the proxy statements of Fortune 100 companies over the period from 2012 to 2019. While year to year, the changes appear largely incremental, the change over the entire period is considerable.
Among the key shifts:
Assessment of auditor
One area that has remained relatively flat is the low percentage (<5%) of companies that that identify the topics discussed by the audit committee and the outside auditor beyond those required by rule. This disclosure might include, for example, that the audit committee discussed with the auditor "significant risks and exposures identified by management, the overall adequacy and effectiveness of the Company's legal, regulatory and ethical compliance programs…and the Company's workplace and distribution safety programs and information technology security programs."
EY also offered the following questions for the audit committee to consider:
For further information on this topic please contact Cydney Posner at Cooley LLP by telephone (+1 415 693 2000) or email (firstname.lastname@example.org). The Cooley LLP website can be accessed at www.cooley.com.
This article has been reproduced in its original format from Lexology – www.Lexology.com.
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