AUDIT COMMITTEE AND AUDITOR OVERSIGHT UPDATE

The Center for Audit Quality (CAQ) and Ideagen Audit Analytics (IAA) have released the Audit Committee Transparency Barometer 2025  ( Barometer 2025 ), the twelfth edition of the CAQ’s annual analysis of audit committee disclosures. The press release  announcing Barometer 2025  reports that “while skills matrix disclosure continues at high rates and disclosure of cybersecurity expertise on boards has grown, most disclosure areas have stagnated or declined.”  Key findings of

During fiscal year 2025, the Securities and Exchange Commission brought 30 percent fewer cases against public companies and their subsidiaries than in FY 2024, and 93 percent of the 2025 cases were brought before January 25, 2025 – the day on which Biden Administration SEC Chair Gensler resigned.  Those findings are reported in SEC Enforcement Activity: Public Companies and Subsidiaries—Fiscal Year 2025 Update , the annual report of Cornerstone Research and the New York Unive

Auditors frequently face client incivility -- “low-intensity deviant behavior with ambiguous intent to harm the target” – and, when they do, they are less likely to challenge aggressive financial reporting.  There are, however, coping strategies that may reduce the adverse effects of client incivility on the auditor’s judgment. These are some of the findings of The Influence of Client Incivility and Coping Strategies on Audit Professionals’ Judgments , a survey and experiment

The Securities and Exchange Commission has apparently thrown in the towel in its controversial campaign to use the internal control requirements of the Securities Exchange Act as a tool to sanction public companies for cybersecurity weaknesses.   In 2023, the SEC brought an enforcement action against SolarWinds Corporation and its Chief Information Security Officer, charging the company with, among other things, violating the requirement in Section 13(b)(2) of the Exchange Ac

The Court of Appeals for the Ninth Circuit has issued an order   temporarily blocking implementation of California Senate Bill 261 (SB 261).  SB 261, the Climate-Related Financial Risk Act , requires U.S. public and private entities with annual global revenue exceeding $500 million that do business in California to disclose their climate-related financial risks and the measures they are taking to reduce and adapt to those risks. See California Outflanks the SEC on Climate D

Technology, business transformation, and digitization are internal audit’s primary concerns according to consulting firm Jefferson Wells’ 2025 Internal Audit Priorities Annual Survey .  The top concerns of audit committees are similar, with Generative Artificial Intelligence (GenAI) now second only to data privacy and cybersecurity. Jefferson Wells’ study involved 257 audit leaders from U.S. for-profit companies across different industries and regions.    For internal audit l

The Center for Audit Quality (CAQ) has released an updated version of its External Auditor Assessment Tool: A Tool for US Audit Committees . Audit committees are responsible for evaluating the external auditor, at least annually, and making a recommendation to the board on whether to retain the auditor. The assessment tool is designed to assist audit committees in performing this evaluation. The CAQ originally issued the U.S. assessment tool, along with a companion worldwide

Oversight of the risks and opportunities presented by artificial intelligence (AI) is one of the key challenges facing audit committees.  From March to June 2025, Tapestry Networks (Tapestry) convened six in-person meetings of its U.S. audit committee network to discuss the role of the board in ensuring that AI is implemented responsibly and consistent with long-term value creation. Tapestry’s audit committee network, which is organized and supported by Ernst & Young, is a gr

Public company audit fees rose to record levels last year. Ideagen Audit Analytics’ (IAA) annual analysis of fees paid to external auditors reports that, in FY2024, the average public company’s total payments to its auditor rose to $3.26 million, a nine percent increase from 2023.  See Audit fee trends: A 20-year review  (September 2025).  Average fees rose for the third consecutive year in 2024, a trend that IAA attributes to “the increasing complexity and regulatory demands

The Governance & Accountability Institute (G&AI) has released 2025 Sustainability Reporting In Focus , the fourteenth edition of its annual series tracking sustainability reporting. The report analyzes trends in sustainability reporting by companies in the S&P 500 and Russell 1000 indices.  In a press release  announcing the 2025 report, G&AI says that its research “shows continued increases in sustainability reporting for both large-cap and mid-cap U.S. public companies -- a

At the urging of President Trump, the Securities and Exchange Commission will consider whether to eliminate quarterly reporting. In a social media post on September 15, the President said, “Subject to SEC Approval, Companies and Corporations should no longer be forced to ‘Report’ on a quarterly basis (Quarterly Reporting!), but rather to Report on a ‘Six (6) Month Basis.’” He asserted that semi-annual reporting would allow management to “focus on properly running their compan

In a blog post  on the website of the National Association of Corporate Directors, the Center for Audit Quality’s Senior Director of Professional Practice, Vanessa Teitelbaum, suggests five questions that audit committees may want to ask their auditor regarding the firm’s PCAOB inspection report.   1.     How did your firm respond to areas identified as deficiencies in the inspection ?  This question provides “visibility into whether the auditor is taking corrective actions t

The Public Company Accounting Oversight Board’s Office of Economic and Risk Analysis (OERA) has published Data Points: Financial Restatements and Auditor Turnover .  The report finds that, from 2005 to 2024, 29 percent of Big R restatements followed an auditor change in the previous year. For the entire public company population, the Big R restatement rate was around three percent. OERA’s analysis excludes investment companies, employee benefits plan, and restatements relate

Deloitte has published The Audit Committee Chair of the Future , a paper that explores the “emerging trends, challenges, and opportunities that are shaping the role of the audit committee chair.”  Deloitte interviewed audit committee chairs of S&P 500 companies from a range of industries.  Deloitte’s report “draws on their insights to provide practical guidance for navigating complexity and driving positive change.”  Below is a summary/overview of the paper.   ​The role of th

Fifty-five percent of directors think someone on their board should be replaced, up from 49 percent who wanted a fellow board member to depart in 2024.  That is one of the key findings of PwC’s 2025 Annual Corporate Directors Survey, Driving a culture of accountability in the boardroom .    PwC surveyed 638 directors. Seventy percent of the companies these directors represent have annual revenue of over $1 billion. Sixty-five percent of the respondents were men, and 32 percen

T wo surveys, one of individuals inside or with ties to public companies and the other of institutional investors, shed light on...

On August 28, the Public Company Accounting Oversight Board announced  that it was postponing the effective date of its new quality...

Autumn leaves are beginning to fall, but, on September 4, the OMB’s Office of Information and Regulatory Affairs released the Spring...