Jun 5, 2015
SEC May Seek More Information from Audit Committees
U.S. securities regulators are preparing a “concept release” that could push corporate boards of directors to disclose more about how they oversee their outside auditors, a top official said on Friday.The Securities and Exchange Commission could soon publish a document, seeking formal feedback from investors about whether they are getting enough information from audit committees, the agency’s chief accountant James Schnurr said Friday. He made the remarks at a financial reporting conference in Pasadena, California.
Under the 2002 Sarbanes-Oxley Act audit committees took on a much larger role in the oversight of auditors, yet the law didn’t require them to disclose many details about their efforts. SEC Chairman Mary Jo White said last year that the agency would consider issuing a release this year on whether audit committees should disclose more to investors about their role.
Audit committees frequently make voluntary disclosures about their work in securities filings. Mr. Schnurr said he would like to understand “how investors currently use the information provided in audit committee disclosures” and the usefulness of additional disclosures, such as identifying the type of information audit committees use in their oversight of outside auditors.
About two-thirds of the 100 largest U.S. companies currently state in proxy statements that the audit committee is responsible for outside auditors. But less than one-third of companies explain the rationale for appointing a particular auditor. Eight percent disclose details on what topics their audit committees discussed with their auditors, according to a study by accounting firm Ernst & Young.