Harvard Law School survey indicates changes in 5 top priorities since 2023 report.
The scope of work expected from audit committees is continuing to grow as the regulatory environment becomes more complex. A new report highlights the top five priorities audit committee members say they are now handling beyond the traditional topics of financial reporting, internal controls, internal and external audit, and ethics and compliance.
They have added these top priorities to their plate to address in the next 12 months, according to a recent report by the Harvard Law School Forum on Corporate Governance. The report is based on a survey that shows the five additional areas as cybersecurity, cited by 69% of respondents; enterprise risk management, 48%; finance and internal audit talent, 37%; compliance with laws and regulations, 36%; and finance transformation, 33%.
The survey also asked audit committees about their practices and effectiveness. The good news was that 89% feel there is adequate meeting time for addressing all items on their agenda. However, 65% indicated there was at least one strategy that might improve the effectiveness of their audit committee. Those strategies include:
- Increased discussion and/or engagement from members during meetings, cited by 29% of respondents.
- Improved quality of pre-read materials, by 28%.
- Improved quality of presentations during meetings, by 26%.
In other areas, only 14% of respondents said their audit committees oversee environmental, social, and governance (ESG) reporting. About 40% said this area falls under the nominating and governance committee, while 30% said it is overseen by the whole board. This is a change from the 2023 study, which showed ESG disclosure and reporting fell among the top three audit committee priorities, cited by 39%, behind cybersecurity at 63% and enterprise risk management at 45%.