Attention Audit Committee Members – SEC Chief Accountant Has Advice for You
In a recent speech titled “Advancing the Role and Effectiveness of Audit Committees,” SEC Chief Accountant Wesley Bricker talked about several “ways to reinforce audit committee effectiveness for high quality financial reporting.” Among other topics, Mr. Bricker focused on the issues of audit committee workload and disclosure. With respect to workload, Mr. Bricker discussed recent survey results showing that many audit committee members believe their workload is unmanageable and stated that “directors should ask themselves if they are identifying the risk of audit committee overload, and if so, are they appropriately managing this risk to enable the audit committee to operate effectively.” According to Mr. Bricker, “[w]hile audit committees may be equipped to play a role in overseeing risks that extend beyond financial reporting, such as cybersecurity and portions of enterprise risk management … it is important for audit committees to not lose focus on their core roles and responsibilities.”
With respect to disclosure, Mr. Bricker encouraged audit committees to consider what he referred to as “enhanced disclosure,” recommending that audit committees go beyond required disclosure and aim to “help increase investor understanding of the reliability and quality of financial reporting [by providing] additional insights into how the audit committee has fulfilled its responsibilities, particularly about the audit committee’s work in overseeing the independent auditor and the financial reporting process.”
For advice on how to implement Mr. Bricker’s recommendations, contact a member of Fredrikson & Byron’s Securities Group.