Nearly two years after the passage of the Sarbanes-Oxley Act, just 20 percent of audit committees have adopted best practices for the financial audit process, says a new survey from J.D. Power Associates. That’s despite the regulatory microscope under which audit committees must now operate.
“Although 20 percent may seem low, it isn’t surprising considering that public companies continue to expand their learning curve in the challenging post-Sarbanes-Oxley environment,” noted Ron Conlin, a partner at J.D. Powers. Nevertheless, he asserted that audit committee performance continues to attract public and regulatory attention because corporate and accounting scandals have put a spotlight on the accounting industry, which makes the “perceptions and experiences of the newly empowered audit committees more important than ever.”
The report, based on interviews with 758 audit committee chairs and 900 CFOs, examines audit committee practices and confidence levels in the accounting industry. The research found that implementing certain best practices leads to higher ratings of the audit—and of auditor performance—which drives higher confidence in the accounting industry.
J.D. Power offers these report findings and examples of best practices:
Interestingly, J.D. Power officials note that audit committees from two industries that are subject to a greater amount of regulation and scrutiny—financial services and energy/utilities—appear to do the best job of implementing best practices.