Financial Reporting and Regulatory Update

Fourth Quarter 2021

From the CAQ

Audit committee transparency report

On Nov. 10, 2021, the CAQ and Audit Analytics issued the “2021 Audit Committee Transparency Barometer,” which tracks S&P 1500 proxy disclosures to evaluate transparency regarding audit committee oversight of the external auditor and other important financial reporting topics.
The CAQ notes that voluntary disclosure of audit committee oversight indicates higher levels of involvement. In addition, effective audit committee oversight enhances audit quality. This edition of the barometer reports that – as has been the case – the highest rates of disclosure relate to nonaudit services, auditor tenure, criteria considered to evaluate the audit firm, and involvement in audit partner selection. Additionally, the report highlights that cybersecurity disclosures continue to have the greatest increases year over year since 2016. The report finds that disclosures related to auditor compensation and explanations for changes in fees paid to the external auditor have the lowest rates of disclosures and provide the greatest opportunity for improvement. The publication also provides disclosure examples.