A group organized by the Center for Audit Quality has released a “Call to Action” designed to encourage audit committees of public companies to proactively consider strengthening their public disclosures to more effectively convey key elements of their critical work to investors and stakeholders.
The paper includes examples of emerging, voluntary practices of strengthened audit committee disclosure, and it cites studies that have examined recent trends in these practices. Some of the recommendations include:
• Clarify the scope of the audit committee’s duties.
• Clearly define the audit committee’s composition.
• Disclose relevant factors considered when selecting an audit firm.
• Provide relevant information about the audit committee’s involvement in the selection of the lead audit engagement partner.
• Disclose key factors considered when compensating the external auditor.
• Provide relevant information about how the audit committee oversees the external auditor.
• Provide relevant information about the evaluation of the external auditor.