Warning the SEC that a stringent governance process is no guarantee that financial statements will never need restatement, ABA yesterday questioned the need for expanded disclosures of audit committee practices.
The disclosures the SEC is considering cover the process that the committee uses to oversee, evaluate and retain its independent auditor, including how often the committee meets with the auditor during the year and how it decides whether or not to change auditors. Further information that may be required includes detailed information related to the specific auditing team.
“We do not believe audit committee disclosures, absent a significant audit event such as a restatement or change in auditor (both of which are already required to be disclosed), will provide decision-useful information for investors,” ABA said.
ABA recommended that any further disclosures be principles-based and voluntary to registrants. Due to the vast range of complexity that bank audits present, voluntary principles can allow companies to avoid boilerplate language and address the changing needs of their investors, the association added. For more information, contact ABA’s Mike Gullette.