Annual Audit Committee Disclosure Barometer finds increase in disclosure of areas of oversight and expertise

Nov 18, 24

Audit disclosures have plateaued in certain areas, according to a new report from Ideagen and the Center for Audit Quality (CAQ). The annual Audit Committee Transparency Barometer Report, now in its 11th year, analyzes audit committee disclosures of companies in the S&P 1500.  

Given audit committees face emerging risks and new areas of oversight responsibility, investors are interested in understanding the board’s composition and expertise. This years’ Barometer shows that disclosures related to expanded disclosure areas – particularly around audit committee oversight of and expertise in cybersecurity and ESG – have increased. Tracked for the first time, this year’s report also found that most boards are disclosing a skills matrix.  

“The Transparency Barometer continues to provide insights into the deliberations of audit committees and how they exercise their expanding responsibilities,” said Michael Nohrden Vice President of Strategy for Ideagen. “It serves as an important tool for boards and the public to track and compare audit committee disclosures in the S&P 1500.”

However, the report identifies several disclosure areas that have plateaued such as external auditor tenure and fees in relation to audit quality. These results demonstrate a continued opportunity for audit committees to enhance their disclosures on key matters to effectively tell their story.   

“We continue to hear from investors that they would like more information – not boilerplate disclosures – around audit committees’ important responsibilities and processes,” said Julie Bell Lindsay, CEO, CAQ. “While we are pleased to see that audit committees are increasingly disclosing information about new oversight areas and their expertise, we hope they will take a fresh look and consider further enhancing their disclosures to ‘tell their story’ and the important work they do.”  

 Some key toplines of the report include:  

• The majority of S&P 500 companies (85%) and S&P midcap companies (75%) disclosed the board of directors’ skills matrix.   
• 64% of S&P 500 boards disclosed the audit committee is responsible for cybersecurity oversight while 34% of S&P 500 boards disclosed the audit committee is responsible for oversight of ESG information.  
• 60% of S&P 500 boards disclosed they have a cybersecurity expert compared with 51% in 2023. ESG or sustainability expertise on the boards of S&P 500 companies also increased by five percentage points since 2023 to 59%.  
• A plateau in disclosure rates was observed across several measures, including considerations in appointing or (re) appointing the external auditor, considerations of the length of tenure, and considerations around how the audit committee evaluates audit fees in relation to audit quality.   

The full report is available to read HERE.