Enhancing audit committee transparency: EY’s review of 2015 disclosures
BoardMatters Quarterly – Volume 8
We reviewed audit committee disclosures by the largest listed companies in five jurisdictions and came up with the below six key observations:
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.
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.
The key areas of focus disclosed by audit committees continue to vary: The topic of discussion varied basis geography.
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%).
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.
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).