Audit reports for most public companies will soon be required to disclose critical audit matters, which are intended to make the audit report more informative for investors. However, over the past several years, companies and their audit committees have gone a long way towards increasing the amount of audit-related information that they provide to investors voluntarily. While year to year the changes appear largely incremental, the change over the entire period is considerable.
The Securities and Exchange Commission (SEC) Division of Corporation Finance recently announced that it is revisiting its approach to responding to no-action requests to exclude shareholder proposals. In essence, the SEC may respond to some requests orally rather than in writing and, in some cases, may decline to state a view altogether, leaving the company to make its own determination.
AS 3101, the new auditing standard for the auditor's report that requires disclosure of critical audit matters (CAMs), is effective for audits of large accelerated filers for fiscal years ending on or after 30 June 2019. Deloitte has reported that an average of 1.8 CAMs were disclosed per audit report and that the most commonly disclosed related to goodwill and intangible assets.
A new milestone has finally been reached for board gender diversity: there are no longer any companies in the S&P 500 with all-male boards. According to a publication on US Board Diversity Trends in 2019, 45% of new board positions among the Russell 3000 were filled by women in 2019. This is up from 34% in 2018 and a substantial improvement compared with only 12% in 2008. Under the new law, public companies will be required to have at least one woman on their board of directors by the end of 2019.
The Financial Accounting Standards Board recently signalled its intent to adopt a new two-bucket approach to stagger the effective dates for new major accounting standards. Under the new approach, the new standards' effective dates would be delayed for entities in bucket two (ie, smaller reporting and private companies, employee benefit plans and not-for-profit organisations) for at least two years after the effective dates for entities in bucket one (ie, other Securities and Exchange Commission filers).