NEW YORK, Sept. 8, 2014 /PRNewswire/ -- Fortune 100 companies continue moving towards greater disclosure related to audit committees and their auditors. In the latest installment of Let's talk: governance, Audit committee reporting to shareholders, 2014 proxy season update, the EY Center for Board Matters discusses the recent trend of increased audit committee transparency, examines how companies are going beyond the minimum disclosures required for the audit committee, and highlights year-over-year changes in practice.
"The enhanced disclosures many audit committees are choosing to make afford investors and other key stakeholders greater insight and confidence in the important oversight work audit committees are undertaking to execute their responsibilities," said Allie Rutherford, Director of Corporate Governance at the EY Center for Board Matters. "For example, audit committees are providing more information on their assessment of companies' external auditors."
"Fortune 100 companies' increasing responsiveness to calls for greater audit committee transparency is a development that we expect to continue over the long-term," said Ruby Sharma, Principal, Ernst & Young LLP and a member of the EY Center for Board Matters. "As disclosures continue to improve, so will investor confidence."
Key findings include:
1. Some audit committees are centralizing their disclosures as part of efforts to communicate more effectively: Audit-related disclosures increasingly are consolidated in an "audit-related" section of the proxy statement or placed in the audit committee report.
2. Some companies are improving the accessibility of the audit committee charter: Audit committee charters detail the responsibilities and duties of the committee based on company-specific circumstances.
- Nearly 15% of companies provided a direct link to the audit committee charter, making it easier for investors to quickly learn about the committee's designated responsibilities.
3. Audit committees are increasingly open about how they oversee their external auditors:
- 65% of reviewed companies specified that the audit committee is responsible for the appointment, compensation and oversight of the auditor, compared to 40% in 2012;
- 31% of reviewed companies explained the rationale for appointing their auditor, including the factors used in assessing the auditor's quality and qualifications, compared to 16% in 2012;
- 46% of reviewed companies observed that the selection of the auditor is in the best interests of the company and/or shareholders, compared to 4% in 2012.
EY expects this trend will continue into the 2015 proxy season, as investors will likely continue or increase engagement with companies on this topic through letter-writing campaigns and direct dialogue.
For a full look at the 2014 findings and a complete copy of Let's talk: governance, Audit committee reporting to shareholders 2014 proxy season update, please visit http://www.ey.com/US/en/Issues/Governance-and-reporting.
About The EY Center for Board Matters
Effective corporate governance is an important element in building a better working world. The EY Center for Board Matters is committed to bringing together and engaging with boards, audit committee members and investors to exchange ideas and insights. Using our professional competencies, relationships and proprietary corporate governance database, we are able to identify trends and emerging governance issues. This allows us to deliver timely and balanced insights, data-rich content and practical tools and analysis to boards, audit committees, institutional investors and others interested in governance topics.
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This news release has been issued by Ernst & Young LLP, a member of the global EY organization that provides services to clients in the US.
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SOURCE Ernst & Young LLP
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