Macroeconomic volatility
Slowing growth, tariff driven inflation divergence, elevated global debt and shifting monetary policy paths are increasing pressure on liquidity, treasury management, forecasting accuracy and internal controls. According to the latest EY survey of CEOs, while approximately 90% of CEOs expect revenue, profitability and productivity growth in 2026, rising energy, labor and compliance costs — combined with reduced ability to pass through price increases — are putting pressure on margins. In response, CEOs are prioritizing operational optimization and productivity, with 43% citing digitalization as a top objective, alongside a renewed focus on customer engagement and retention to stabilize demand. Looking ahead, we anticipate organizations will continue to sharpen cost discipline through productivity enhancing investments such as AI and adopt more targeted, customer informed pricing strategies.
Supply chain shifts
As trade alliances and supply chains shift, companies are deciding where to pursue growth — and where to optimize flexibility and manage risk, often pulling back from some markets while doubling down on others. The recent conflicts in Iran have further caused disruptions and continue to fuel uncertainty around the macroeconomic impacts as well as impacts to the business (e.g., supply chain, shipping routes, energy and fuel costs). We anticipate organizations will be stress-testing both short- and long-term impacts stemming from the war in Iran. Additionally, aggressive use of reciprocal and sector-specific tariffs is accelerating supply chain redesign, localization and “friendshoring,” causing companies to carefully evaluate capital deployment, third party risk and margin resilience.
Artificial intelligence
AI is emerging as both a growth catalyst and a governance challenge. The vast majority of CEOs report that their AI initiatives have met or exceeded expectations. Many report that AI deployments have demonstrated solid economic fundamentals: automation of routine work, faster and more accurate forecasting, improved risk detection, and accelerated product development. Among leading companies, the focus is shifting from proliferating pilots to scaling proven use cases, prioritizing depth over breadth by embedding AI across critical value chains. Boards are increasingly focused on understanding how AI governance is evolving as well as oversight of AI related risks, including data governance, cyber resilience, regulatory compliance and talent disruption.
Cybersecurity
Cyber risk continues to escalate in scale and consequence. Heightened geopolitical tensions, expanding digitalization and broader AI adoption are increasing exposure to cyber incidents, operational disruption and intellectual property loss, elevating cyber resilience as a sustained audit committee priority.
Talent
Talent dynamics are evolving rapidly – boards are grappling with how automation, augmentation and new operating models will reshape jobs, skills and communities. In particular, we anticipate boards and audit committees will seek to understand how automation and AI adoption affect talent risks, cost structures and internal controls. As a result, boards and audit committees are increasingly embedding talent considerations into broader transformation and risk discussions. Leading companies will also be prioritizing workforce planning, reskilling and productivity enhancing investments as well as building in AI-related workforce scenarios directly into enterprise risk planning.
These rapid changes and risks continue to challenge and expand audit committee agendas. To be effective in this environment, strong audit committees are making continuous learning a key part of how the committee operates. Leading audit committees are building regular deep dives and training sessions into their rhythm, covering topics like cyber, AI, sustainability, regulatory and geopolitical change, and core business operations.
Accounting and disclosures
This quarter, audit committees are prioritizing how they navigate macroeconomic conditions and adapt to the shifting legislative and regulatory landscape. They are actively evaluating how ongoing economic uncertainty and changes in the business environment will impact financial reporting processes. Key financial reporting developments are outlined below:
Customs and Border Protection provides initial plan for tariff refunds
Customs and Border Protection (CBP) on 6 March 2026 outlined its plans to establish a system for tariff refunds in 45 days following an order by the Court of International Trade (CIT) on 4 March 2026 for CBP to progress with the tariff refund process. CBP said it would work on a streamlined system to process the refunds after noting it was operationally infeasible for the agency to manually process millions of individual refund requests. The CIT noted in its order that “all importers of record whose entries were subject to IEEPA duties are entitled to the benefit of” the Supreme Court’s 20 February 2026 ruling that tariffs imposed by President Donald Trump in April 2025 under the International Emergency Economic Powers Act (IEEPA) are unlawful.
While the CIT order and CBP’s response provide additional information on eligibility and potential refund processes, uncertainty continues to exist. Companies will need to closely monitor developments and evaluate any impact of these developments on their financial statements.
OECD releases side-by-side package on Pillar Two global minimum tax
The Organisation for Economic Co-operation and Development (OECD) released a side-by-side arrangement that includes a new side-by-side safe harbor (safe harbor) under the Pillar Two Global Anti-Base Erosion (GloBE) rules. The safe harbor, once enacted into local jurisdictional law, exempts a multinational entity (MNE) from certain Pillar Two taxes, mainly the income inclusion rule and the undertaxed profits rule top-up tax charging provisions, when the ultimate parent entity is located in a jurisdiction that maintains a qualified side-by-side tax regime. However, the MNE would remain subject to the qualified domestic minimum top-up tax charging provision in the jurisdictions in which they maintain constituent entities.
The OECD determines whether a jurisdiction has a qualified side-by-side tax regime based on whether the regime contains minimum tax elements such that it will qualify as a side-by-side comparison to the Pillar Two taxes. Once enacted into local jurisdictional law, the safe harbor is applicable for fiscal years beginning on or after 1 January 2026. The safe harbor does not impact any Pillar Two taxes related to periods before 2026 (e.g., 2025 for calendar-year-end companies).
The OECD has determined the US maintains a qualified side-by-side tax regime, and accordingly, once the safe harbor is enacted into local jurisdictional law, it is expected to reduce the amount of Pillar Two taxes that US parent MNEs would otherwise be subject to if the safe harbor was not in place.
For the safe harbor to be recognized within a jurisdiction there generally must be enacted tax legislation that recognizes the safe harbor within that particular jurisdiction. Entities should continue to update their estimated annual effective tax rate in each interim reporting period to consider developments in the period.
