Audit Committees: the Corporate “Kitchen Junk Drawer”
Whistleblower claims, corruption abroad and cybersecurity concerns are bogging down company audit committees. And with new regulation from the Securities and Exchange Commission on the horizon, audit committees aren’t expected to get less demanding.
CFO Journal on Tuesday detailed the challenges audit committee members face in dealing with existing and future regulations, and how the strain of the work has caused some executives to flee.
The majority of audit committee members who responded to a survey from accounting firm KPMG said audit committee time constraints had grown over the past two years.
Whistleblower claims, which fall under audit committee oversight following the 2002 Sarbanes-Oxley Act, are taking up a lot of that time. Fredric Reynolds, who chairs the audit committee for Mondelez International Inc., says he can spend more than 100 hours a year on committee work.
The SEC’s expected “concept release” in March will detail what audit committees need to disclose to investors. Though some audit committees choose now to provide additional information, SEC-mandated disclosure might be more readable and complete.
“Only 13% of the companies in the S&P 500 disclosed to investors their audit committees’ specific considerations in approving their auditor,” the report says.