While there are many surveys on audit committee priorities, a recent favorite of mine is the Audit Committee Practices Report: Common Threads Across Audit Committees published in March 2024, by the Center for Audit Quality and the Deloitte Center for Board Effectiveness. Respondents were asked to identify the top priorities for audit committees over the next twelve months. The top two should be of no surprise as cybersecurity and enterprise risk management were again leading the list. 

On March 6, 2024, the Securities and Exchange Commission (SEC) adopted final rules to require registrants to disclose certain climate-related information in registration statements and annual reports. According to the relating SEC Fact Sheet:

• The final rules require a registrant to disclose, among other things: material climate-related risks; activities to mitigate or adapt to such risks; information about the registrant's board of directors' oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant's business, results of operations, or financial condition.
• Further, to facilitate investors' assessment of certain climate-related risks, the final rules require disclosure of Scope 1 and/or Scope 2 greenhouse gas (GHG) emissions on a phased-in basis by certain larger registrants when those emissions are material; the filing of an attestation report covering the required disclosure of such registrants’ Scope 1 and/or Scope 2 emissions, also on a phased-in basis; and disclosure of the financial statement effects of severe weather events and other natural conditions including, for example, costs and losses.
• The final rules include a phased-in compliance period for all registrants, with the compliance date dependent on the registrant’s filer status and the content of the disclosure.



This is a good summary for management and directors of U.S. public companies to review the background, content, presentation, and phase-in period of these required disclosures.

Ever wonder how good your audit firm is, or perspective audit firms are, in following audit standards of the Public Company Accounting Oversight Board (PCAOB)? It’s easy to find out, simply go to PCAOB’s website here to conduct a search. According to this page; …the PCAOB conducts a continuing program of inspections of registered public accounting firms to assess a firm’s compliance with certain laws, rules, and professional standards in connection with its performance of audits, issuance of audit reports, and related matters involving public companies and other issuers. The Board issues a report on each such inspection, and a portion of each report is publicly available. 

Reviewing these reports can shed light on where audit firms struggle through identified audit deficiencies. Common deficiencies include flaws in the audit of internal control over financial reporting (ICFR) and failures to perform audit procedures to determine whether a matter should have been disclosed in the auditor’s report as a critical audit matter (CAM).

Kral Ussery is a national CPA firm providing services that external auditors cannot due to independence concerns, such as accounting advisory and internal audits. Download our services flyer.