PwC Offers Ideas for Audit Committee Priorities

Q2 Audit Committee Guide, a new publication from PwC’s Governance Insights Center, discusses nine topics that audit committees should consider as they prepare their agendas for the balance of 2025. PwC describes this paper as “[e}verything you need to walk into your next audit committee meeting with confidence” and as a guide to help “streamline meeting prep, prioritize agenda items, and plan for the future.”  For each of the nine topics covered, PwC discusses what the audit committee needs to know, why the topic is relevant to the audit committee, and what questions the audit committee should ask.  Below is an overview of each topic, along with an example of a suggested question related to that topic.

1. US Tax Policy – H.R. 1: “One Big Beautiful Bill Act”.

Companies will face accounting and financial reporting challenges because of tax law changes. Examples include changes to deferred tax assets and liabilities, changes to projected tax payments, changes to valuation allowances, and disclosure of the estimated impact of proposed tax legislation. The audit committee should confirm that management has processes to monitor tax developments and is prepared to account for the impact of tax law changes appropriately.

Sample question:   What is management’s process for assessing resource needs, including specialist knowledge and adequacy of the technology, to support the finance and tax teams’ data and reporting needs?

2. Accounting for market/geopolitical uncertainty.

Macroeconomic and geopolitical uncertainty and volatility characterize the current environment.  Audit committees need to understand how these factors impact accounting estimates, internal controls, and financial disclosures.

Sample question:   What is management’s process for evaluating how market uncertainties might affect inventory valuation? Are there risks of inventory obsolescence or write-downs due to increased costs?

3. Audit committee oversight of artificial intelligence.

“As companies begin to evaluate and use AI in the financial reporting process, audit committees will want to understand where, why and how management is using it and verify that appropriate controls and processes are in place to manage unique AI-related risks.”

Sample question:   How are AI models tested for accuracy, completeness, reliability, data bias, and other risks prior to and after deployment?

4. Adding special topics and deep dives to the agenda.

PwC suggests that audit committees consider “deep-dive sessions” at which management provides a comprehensive update on a key oversight area. Deep dives may also include presentations from external experts or experiential sessions, like tabletop exercises. Areas that PwC suggests for these sessions include internal controls and risk management, tax matters, regulatory and compliance matters, fraud risk and ethics compliance, litigation and legal matters, vendor management, and technology transformation.

Sample question:   What is management’s process for identifying and addressing cybersecurity threats?

5. Earnings guidance in an uncertain environment.

“Overseeing earnings guidance is integral to the audit committee’s role in supporting the integrity of financial reporting and safeguarding shareholder value. Therefore, it is essential for audit committees to be aware of how market conditions affect the company’s earnings outlook and the rationale behind any changes to guidance.”

Sample question:   What is management’s process for stress-testing financial forecasts against various geopolitical and economic scenarios?

6. Evolving enterprise risk management.

Oversight of the company’s ERM process is typically an audit committee responsibility. ERM is also linked to the committee’s oversight of financial reporting and of internal controls. The audit committee should have a deep understanding of the company’s risk landscape and confirm that the ERM framework is “robust, strategic, and aligned with the company’s goals.”

Sample question:   What is management’s process for identifying the company’s top risks, prioritizing them, and developing strategies to mitigate them?

7. Mid-year considerations for internal audit oversight.

Audit committee oversight of internal audit is essential to effective governance.  “As companies navigate current economic uncertainties and market volatility, the role of internal audit in providing assurance over areas such as financial reporting and aspects of operations involving important business risks, among others, becomes increasingly critical.”

Sample question:   What is the CAE’s process for aligning internal audit’s activities with the organization’s strategic objectives and risk profile?

8. Finance transformation oversight.

Digital technologies, regulatory complexity, and heightened stakeholder expectations are leading to the restructuring of finance functions. “Audit committees are uniquely positioned to guide and oversee these transformation efforts, supporting alignment with strategic objectives and adherence to regulatory requirements as well as making sure the initiative is implemented effectively and responsibly, while safeguarding against potential risks such as data breaches and financial inaccuracies.”

Sample question:   How will the transformation impact the company’s compliance with existing and emerging regulatory requirements, and what measures are being contemplated to support ongoing compliance?

9. Recurring items for the audit committee agenda.

PwC recommends that audit committees regularly discuss hotline complaints and code of conduct violations, changes in the regulatory environment, related-party transactions, and internal and external audit plans.  In addition, audit committees should hold discussions with the chief information officer, chief information security officer, and general counsel as needed. 

Audit Committee Takeaways

PwC’s paper is a good overview of current issues that most audit committees are facing.  Committees may want to review and consider PwC’s suggestions to make sure they focus on the relevant issues.  Along with its suggested questions, PwC’s discussion of why the various topics listed are important to audit committees may provide useful insight for committees that are structuring their agendas for the balance of 2025.