Audit Committee Brief
All 2014 newsletters for Audit Committee Members
Audit Committee Brief is Deloitte's publication for audit committee members. It provides recommendations, overviews of corporate governance resources, regulatory and legislative environment outlooks, and technical updates.
What's on your agenda for 2015?
November / December 2014
The depth and range of the audit committee’s duties are greater than ever and it has become increasingly important to prioritize the agenda and allocate time appropriately. While the responsibility to oversee financial reporting and compliance and to monitor management activities remains fundamental, items such as information technology, globalization, regulatory matters, risk oversight and tax issues have recently played a significant role in many audit committees’ activities and this is likely to continue in 2015. This edition of the Audit Committee Brief highlights several prominent and timely issues likely to be high priorities for audit committees in 2015 and provides considerations and questions to ask regarding these topics, as well as resources for further information.
Internal audit: Moving beyond Sarbanes-Oxley compliance
September / October 2014
Among the most common expectations of internal audit is to gain assurance on financial controls, the reliable execution of audit plans, and coordination with the external auditor. But given the lack of specific guidelines or requirements regarding internal audit’s responsibilities, there is a broad range of practice based on organizational needs, structure, and culture. Audit committees can play an important role in confirming the whole organization is on the same page regarding the goals for internal audit, and in providing a strong avenue of communication for the chief audit executive to share concerns and perspectives. This issue of the Audit Committee Brief focuses on the evolving role of the internal audit function, and provides considerations for how audit committees can effectively work with management and internal audit to maximize the value of the function in the context of a company’s specific circumstances.
Finance Talent: Building Sustainable Leadership
The competition for top-performing finance talent remains strong. Effectively identifying and onboarding senior finance professionals, monitoring their career development, and managing the pipeline of future leaders can help sustain an organization’s success. Executive succession and development are often the responsibility of the full board. However, the audit committee may consider becoming involved in overseeing the finance organization, keeping the quality and reliability of financial accounting and reporting and related controls at the forefront.
Update on regulatory issues affecting audit committees
Audit quality, transparency, auditor retention, and other financial reporting matters relevant to audit committees have been on regulators’ agendas in recent months. The SEC, PCAOB, and other regulatory bodies are actively soliciting the audit committee’s views on various topics and initiatives, and have released a variety of publications, communications, and resources targeted to committee members. This issue of the Audit Committee Brief discusses recent domestic and international regulatory developments that are likely to affect audit committees, and includes links to a variety of resources for further information.
Technology at the forefront
The increasing adoption of emerging technologies across all types of businesses mirrors the rapid expansion of high-tech devices and applications that have transformed the daily lives of people around the world. Given their global significance, technology implementations and related security activities can no longer be considered just the purview of the IT function. This issue of the Audit Committee Brief surveys recent trends and developments in several areas related to technology, including big data, social media, cloud computing, IT implementations, and cybersecurity. Also included are questions audit committee members can ask management and IT specialists to confirm that risks and opportunities are properly overseen.
The role of the audit committee throughout the M&A life cycle
Governance bodies, including audit committees, are increasingly being asked to understand all aspects and stages of significant M&A deals, both to facilitate a specific transaction’s financial goals and to help the company better manage the risks associated with deal planning, analysis, and execution. Regardless of the governance approach taken, it may be helpful for audit committees to evaluate whether the practices related to M&A discussed in this issue of the Audit Committee Brief are in place, and to understand how the audit committee can best support these efforts before, during, and after M&A transactions.
The 2013 COSO Framework and the audit committee
Audit committees play a critical role in overseeing internal control. Although their primary focus may be on internal control over financial reporting, now, more than ever, audit committees are taking the lead in overseeing controls pertaining to compliance and operational matters. This issue of the Audit Committee Brief highlights hot topics related to internal control over financial reporting in light of the issuance of the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO’s) updated 2013 Internal Control — Integrated Framework (2013 COSO Framework). Also included are important considerations for audit committees in overseeing the implementation of the 2013 COSO Framework, and a discussion of how the framework can help audit committees manage elevated expectations regarding internal control.
A New Era in Audit Committee Reporting
Regulators, investor advocates, and other stakeholders have increasingly called for companies to build trust with investors in recent years. Much of this attention has focused on the audit committee’s role in supporting investor interests. The calls for increased transparency in the oversight of the independent auditor and other key audit committee duties will likely continue to grow, and audit committees can respond by providing more meaningful disclosures that increase awareness of their responsibilities and how individual committees carry them out. This Audit Committee Brief provides an overview of SEC requirements for audit committee reports and highlights an analysis Deloitte completed in 2013 that took a deeper look at the language audit committees use in their reports in their effort to be more transparent.
Highlights from the AICPA’s 2013 Conference on Current SEC and PCAOB Developments
The 2013 AICPA National Conference on Current SEC and PCAOB Developments featured insights from regulatory leaders at the SEC, PCAOB, and other agencies, as well as discussion panels on accounting, reporting, and auditing issues. Transparency and the quality of financial reporting, and their fundamental role in protecting investors, emerged as frequent themes. Numerous speakers tied their comments back to these themes in the context of improving disclosures in registrants’ filings, evaluating internal controls, executing high-quality audits, developing standards that reduce complexity and increase clarity, and enhancing the usefulness of the information provided in the auditor’s report. This issue of the Audit Committee Brief highlights developments and insights from the conference that are of particular relevance to audit committee members, along with additional resources useful in addressing these issues.