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Perspectives
Audit Committee Practices Report
Common Threads Across Audit Committees
Spotlight
A new series that provides a closer look at some of the findings from the Audit Committee Practices Report. Read the latest Spotlight findings now.
Key findings
As the regulatory environment grows in complexity and organizations address new and continuing challenges, additional expectations are placed on audit committees. The scope of audit committee responsibilities continues to expand beyond the traditional remit of financial reporting and internal controls, internal and external audit, and ethics and compliance programs. This edition of the report is based on the survey results of 266 audit committee members, most of whom are from US public companies (74%), and of which 81% have more than $700 million in market cap. The survey questions focused on the main oversight areas within the audit committee’s purview and identified the top priorities for audit committees over the next 12 months. Beyond financial reporting and internal controls, audit committees expect to be focused on these top two priorities, which are making repeat appearances in the same spots they had in last year’s survey results:
- Cybersecurity
- Enterprise risk management (ERM)
The third priority wasn’t quite as clear, with three topics clustered closely together:
- Finance and internal audit talent
- Compliance with laws and regulations
- Finance transformation
Ranking of top priorities of the audit committee over the next 12 months
(n = 255)
Ranking as 1
Ranking as 2
Ranking as 3
Total respondents ranking
Cybersecurity
Beyond financial reporting and internal controls, most respondents (69%) indicated that cybersecurity will be in the top-three priority areas for the audit committee in the next 12 months, and 3 in 10 (30%) ranked cybersecurity as the No. 1 priority for the audit committee in that period.
Enterprise risk management (ERM)
Almost half (48%) of respondents indicated that ERM will be a top-three priority in the next 12 months. Interestingly, respondents were evenly split in terms of ranking ERM’s priority order—with 16% each ranking it as 1, 2, or 3.
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Finance and internal
audit talent
Finance and internal audit talent is a priority for audit committees, with 37% of respondents indicating that it is one of their top-three priorities over the next 12 months; 9% suggested it’s the top issue.
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Compliance with laws and regulations
More than one-third (36%) of respondents cited compliance with laws and regulations as one of the top-three priorities for audit committees in the next 12 months; a significant increase from last year. Seventeen percent suggested it’s the top issue.
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Finance
transformation
Thirty-three percent of respondents indicated that finance transformation is in the top-three priorities for their audit committee in the next 12 months, and almost half of those respondents selected this as the top issue.
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“The effectiveness of an audit committee can be distinguished by how it executes its responsibilities. Key to this is including the right topics on the agenda, obtaining information that enhances comprehension of these issues, and fostering candid and transparent discussions. These are among the actions that audit committee members can take to be prepared for the issues facing them today and in the future.”
Managing Director, Audit & Assurance
Governance Services and Audit Committee Program Leader
Center for Board Effectiveness
Deloitte & Touche LLP
Audit committee practices and effectiveness
In addition to audit committee priorities, respondents provided insights into how audit committees can further enhance their practices and effectiveness. Eighty-nine percent of respondents feel there is adequate meeting time for addressing all items on the audit committee agenda. Yet most respondents (65%) also indicated there was at least one strategy that might improve the committee’s effectiveness.
Ranking of top strategies to enhance audit committee effectiveness
(n = 154), Note: Excludes respondents stating their committee was already at full effectiveness.
Ranking as 1
Ranking as 2
Ranking as 3
Total respondents ranking
Additional insights
The full report dives into additional findings that may help stimulate conversation among audit committee members and those who interact with them. These insights include:
- Where ESG reporting and artificial intelligence governance fall on the agenda
- Internal audit effectiveness
- Time spent in audit committee meetings
- Audit quality
- Audit committee turnover and rotation
- Audit committee expertise
- An appendix of all survey data
Take a look back:
Explore previous editions of our Audit Committee Practices Report:
Key contacts
Krista Parsons
Managing Director and Audit & Assurance Governance Services and Audit Committee Program Leader | Center for Board Effectiveness | Deloitte & Touche LLP
Carey Oven
Enterprise Leader Development & Succession | Deloitte & Touche LLP
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