Apr 17, 2013
From the Audit Committee Institute
In light of ongoing economic volatility and uncertainty, audit committees need to stay vigilant in their oversight of financial reporting and disclosure.
Key areas of ongoing focus include fair value estimates and impairments, understanding management's assumptions underlying critical accounting estimates and ensuring that all financial communications are consistent with what is being said in regulatory filings.
In order to avoid surprises and focus their dialogue with management, internal audit and the external auditor, the audit committee should understand the process that management uses to determine material accounting judgments and estimates, and should be confident that the company's financial team has sufficient resources, skills and bench strength.
A number of developments impacting financial reporting and other compliance issues will need to be front and center -- from the recent tax law changes and federal budget sequestration, to ongoing SEC rulemaking activities and accounting changes from FASB.
The following updates and reminders are intended to help audit committees stay apprised of current financial reporting issues and changes on the horizon, and to support timely discussions with the financial management and audit teams supporting the financial reporting process.