Consulting firm EY released a report on audit committee reporting trends for 2018. The US survey of investors generally indicated high degrees of confidence in the audited financial information disclosed by public companies and in the quality of financial reporting. The EY Center for Board Matters has reviewed voluntary proxy statement disclosures by Fortune 100 companies relating to audit committees and the audit since 2012. EY’s report also noted an increase this year in the number of votes against ratifying the external auditor of firms, which may indicate that investors may be taking a stricter approach to reviewing the company-auditor relationship. Overall, EY observed a dramatic increase in voluntary disclosures in most categories since it began examining these disclosures in 2012. Other findings:
- In 2018, 71% of companies disclosed the length of auditor tenure. In 2017, the percentage was 64%, and in 2012 it was 25%.
- Sixty-two percent of companies disclosed the factors used in the audit committee’s assessment of the external auditor qualifications and work quality, while in 2017 and 2012 the percentage was 58% and 18%, respectively.
- In 2018, the percentage of companies disclosing that the audit committee considers non-audit fees and services when assessing auditor independence increased to 89% from 86% in 2017. In 2012, 12% of companies disclosed this information.
- The percentage of companies providing an explanation for a change in all fees paid to the external auditor decreased slightly from 45% in 2017 to 44% in 2018, while just 10% of companies made these disclosures in 2012. However, in 2018 only 16% provide an explanation for a change in the audit fee itself.