NACD Convenes Audit Advisory Council

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This Tuesday, NACD convened its Audit Advisory Council and brought together audit committee chairs from Fortune 500 companies, shareholder representatives, and government regulators.

The first half of the meeting’s discussion centered on recent activity from the PCAOB and the SEC. Both the regulatory bodies and council members discussed the current and pending regulations with attention to the possible impact these rules may have. In particular, the PCAOB’s concept releases pertaining to a new auditor discussion and analysis and mandatory audit firm rotation created the most debate around the table.

The discussion of transparency and disclosure continued for the remainder of the meeting. The council discussed three methods to help improve the communication of audit committee activities:

  1. Make more robust audit committee reports in the proxy describing the steps taken to complete the yearly audit, including the interactions with external auditors.
  2. Expand committee charters to include the general process taken to complete oversight responsibilities.
  3. Circulate exemplary audit committee reports and charters as models for future reference.

The meeting came to a close with a brief discussion of the challenges facing audit committees. Risks associated with information technology (IT) were on the top of the list. Many participants were concerned with the speed of emerging technologies, and the difficulty of staying up-to-date in this area.

The NACD Audit Advisory Council will produce a summary of proceedings for an overview of the topics discussed. Additionally, the council will meet again next year to continue this important dialogue.

1 Comment

  • Mark Lancaster says:

    Hopefully, the Council indicated to the PCAOB and the SEC that the last thing we need is to require the auditors to provide a written report that will be filed. The only result from that will be a boiler plate document, and then more limited informal comments to the audit committee. In my view, what audit committees need are more candid, qualitative impressions from the auditors, which will not occur with the current proposals from the PCAOB. The NACD, in my opinion, should be as direct as politically possible on this matter. Examples of best practices on audit committee dialogue with the auditors would be great. Thanks for reading this.