What Should be on the Audit Committee’s 2023 Agenda?, January 2023 Update lists accounting and consulting firm publications that describe issues on which audit committees should focus in 2023. In setting their agendas, audit committees may also want to review a new EY publication, SEC top four: What public companies, boards and investors should watch for in 2023. While the focus is broader than issues that directly affect audit committees, many of the topics discussed will impact the committee’s work in some way.
EY groups pending SEC initiatives under four headings – disclosure, the proxy process, regulation of crypto assets, and enforcement. With respect to disclosure, EY discusses six “expected actions”:
Adoption of climate-related disclosure rule. (See SEC Unveils its Climate Disclosure Proposals, March 2022 Update.)
Adoption of cybersecurity risk governance disclosure rule. (See SEC Proposes Cyber Risk Management and Attack Reporting Requirements, March 2022 Update.)
Adoption of disclosure proposal for share repurchase modernization.
Adoption of SPAC-related disclosure rule.
Release of human capital-related rule proposals.
Dodd-Frank Act disclosure rulemaking, including changes to the resource extraction payments disclosure rule. (See If at First You Don’t Succeed: SEC Adopts Revised Resource Extraction Disclosure Rule, December 2020 Update.)
As to the proxy process, EY states that the SEC will take final action on proposed rules that would impose new limits on the ability of companies to exclude shareholder proposals from the proxy statement. On the regulation of crypto assets, EY expects “continued scrutiny of the crypto asset industry and related disclosures, but minimal rulemaking activity”; the SEC is likely to continue to rely primarily on aggressive enforcement, premised on the idea that most crypto assets are securities under the federal securities laws. Finally, in the area of enforcement generally, EY anticipates that the SEC will focus on high-profile areas such as crypto, cybersecurity, and ESG disclosures.
In addition to the four priority areas, EY also discusses the PCAOB’s agenda, compliance with the Holding Foreign Companies Accountable Act (which addresses the PCAOB’s ability to inspect audits performed in China), and SEC initiatives relating to private company and private fund disclosure.