Report: Companies Heeding Calls for Greater Transparency

Large U.S. companies are answering demands for greater openness by voluntarily sharing more information in the audit process, according to a new report by EY’s Center for Board Matters.

Over the last four years, companies have increased their voluntary audit committee-related disclosures, the report says.

In reviewing 2015 proxy statements of Fortune 100 companies, EY’s Center for Board Matters says firms are exceeding the minimum disclosure requirements. Under the Sarbanes-Oxley Act of 2002, audit committees took on a much larger role in oversight of auditors, but the law didn’t require them to disclose much about their efforts.

According to a CFO.com article, the report contends that “more companies are disclosing how they oversee external auditors, with 71% specifying that the audit committee is responsible for the appointment, compensation and oversight of the auditor, compared with 41% in 2012 and 65% in 2014.”

Additionally, “Sixty-one percent of companies disclosed that the audit committee was involved in the selection of the audit firm’s lead engagement partner — something no company did in 2012.”

The firm says, “Initiatives by regulators, investors, corporate governance leaders, and other stakeholders have encouraged these disclosures by raising awareness of the role of audit committees and noting the benefits of greater transparency such as increased investor confidence.”

The SEC is seeking public comment on current audit committee reporting requirements. “This and other actions by policymakers in 2015 likely will amplify the discussion — and affect the evolution — of the audit-related disclosure landscape in the coming years,” EY predicted.