Enhancing audit committee transparency: EY’s review of 2015 disclosures

BoardMatters Quarterly – Volume 8

  • Share

We reviewed audit committee disclosures by the largest listed companies in five jurisdictions and came up with the below six key observations:

1

Audit committees still provide relatively few insights into how they oversee the auditor: Nearly 60% of companies we reviewed across the five jurisdictions disclose that the audit committee is responsible for the appointment, compensation and oversight of the external auditor.

2

Most audit committees continue to disclose that they consider the impact of non-audit services on auditor independence: This was the most common disclosure (80%) across the five jurisdictions.

3

The key areas of focus disclosed by audit committees continue to vary: The topic of discussion varied basis geography.

4

Disclosure of auditor tenure is increasing but continues to vary significantly across jurisdictions: Consistent with last year, disclosure of auditor tenure remains the highest in the UK (85%) and lowest in Singapore (3%).

5

Disclosure by audit committees on why their choice of external auditor is in the best interests of the company and/or shareholders is an emerging practice: Most audit committees included a statement recommending the appointment or reappointment of the external auditor, or a statement that the audit committee was satisfied with the performance of the auditor.

6

Many audit committees disclose information related to their composition with a focus on independence and financial expertise: A significant number of audit committees disclosed the independence (75%) and financial expertise (75%) of their members. It is less common for audit committees to disclose other aspects of their composition, including industry expertise (11%) and diversity (negligible).