Disclosure of audit committee’s oversight increases

Focus on evaluation of external auditors has intensified.

Public company audit committees are increasing disclosures related to their oversight of external auditors, a Center for Audit Quality (CAQ) study shows.

Compared with 2014, more companies in the Standard & Poor's (S&P) 1500 included information in their proxy disclosures about the factors they considered in appointing an audit firm, their responsibility for audit firm compensation, and the criteria they discuss when evaluating their audit firm.

The study of proxy disclosures was conducted by the CAQ, which is affiliated with the AICPA, and independent research provider Audit Analytics. It appears to show the results of heightened focus on the audit committee's role in choosing and evaluating the external auditor.

Areas showing a rise in disclosures compared with 2014 included:

  • Factors considered in selecting the audit firm: Disclosures increased for companies in the S&P 500 (25% in 2015, up from 13% in 2014), the S&P MidCap 400 (16%, up from 10%), and the S&P SmallCap 600 (11%, up from 8%).
  • Audit firm compensation: Audit committees disclosing their responsibility for determining compensation for the audit firm rose for companies in the S&P 500 (16%, up from 8%), the S&P MidCap 400 (3%, up from 1%), and the S&P SmallCap 600 (5%, up from 1%).
  • Audit firm evaluation and supervision: More audit committees disclosed their criteria considered when evaluating the audit firm at companies in the S&P 500 (24%, up from 8%), the S&P MidCap 400 (25%, up from 7%), and the S&P SmallCap 600 (22%, up from 15%).

For each of the three index sizes, more companies also included a statement that the audit committee is involved in partner selection and a statement that the audit partner rotates every five years.


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.