SEC official urges focus on accounting committee workload

Chief accountant Wesley Bricker also backs increased board diversity

Diversity and balanced workloads are key features to ensure audit committees are able to fulfill their duties, according to SEC chief accountant Wesley Bricker.

In remarks to the University of Tennessee’s C Warren Neel Corporate Governance Center last week, Bricker highlighted what he called audit committees’ critical role in contributing to financial statement credibility. They do this through their oversight and resulting impact on the integrity of a company’s culture and internal control over financial reporting (ICFR), the quality of financial reporting, and the quality of audits performed on behalf of investors, he said, adding: ‘The importance of the audit committees’ work cannot be overstated.’

Part of ensuring audit committee effectiveness for producing high-quality financial reporting is keeping a close eye on their capacity, Bricker told attendees. ‘Balancing audit committee workload is especially critical given the need for audit committees to stay current on emerging issues, whether financial, ICFR or disclosure-related through continuing education and other means,’ he said.

Bricker pointed to recent surveys as indicating that some audit committees are finding it difficult to perform their core responsibilities while covering other major risks on their agendas, with many saying their workload is not manageable. ‘This emphasizes the importance of the role of the board in driving the audit committee’s focus and responsibilities,’ he said. ‘Board directors should ask themselves whether they are identifying the risk of audit committee overload and, if so, [whether they are] appropriately managing this risk to enable the audit committee to operate effectively.’

Although audit committees may be equipped to play a role in overseeing risks outside of financial reporting, such as cyber-security and aspects of enterprise risk management, it is important they do not lose focus on their core roles and responsibilities, he added.

The workload can be managed at least in part through consideration of the scope of the audit committee charter, agendas, education and advisers. ‘It is worth noting that listing standards required as a result of the Sarbanes-Oxley Act provide an audit committee with explicit authority to obtain advice and assistance from outside legal, accounting or other advisers as the audit committee deems necessary or appropriate to carry out its duties,’ Bricker said.

‘Audit committee members must help each other test their judgment and instincts in landing on the important issues,’ he told the audience. ‘Factors that lead to greater audit committee effectiveness include group dynamics, training, information reporting and focus on substantive issues.’ 

The chief accountant also noted the recent ‘appropriately strong interest and focus of investors on diversity of thoughts within the board of directors.’ Investors are pressing for greater attention to be placed on board composition.

‘Diversity of thoughts diminishes the extent of group thinking, and diversity of relevant skills… enhances the audit committee’s ability to monitor financial reporting,’ he said. ‘Academic research tells us that boards with diverse members allocate more effort to monitoring, have better financial reporting quality and are more likely to hold management accountable after poor performance.’ 


You must be registered to comment.

Please Sign In or Register.

10 questions every board should ask in overseeing cyber risks

The consequences of a data breach could be significant. Recognizing that directors can protect themselves from liability in the case of a breach by taking an active oversight role in their company’s cybersecurity preparedness, this paper sets out to provide boards with some practical advice about how to approach cybersecurity oversight, focusing on ten key categories of questions.

Please click here to download the report.

Nasdaq Corporate Solutions

Nasdaq Corporate Solutions helps organizations manage and master the two-way flow of information with their audiences. Around the globe, market leaders rely upon our unmatched suite of advanced technology, analytics and consultative services to maximize the value of their work—from investor relations and corporate governance to public relations and communications.

Nasdaq MeetX and Directors Desk board portals help streamline meeting processes, accelerate decision-making and strengthen governance. Used by public, private and non-profit organizations, including over half of the Fortune 500, our platforms provide an effective solution for paperless meeting management and combine functionality with robust security features, ease-of-use and mobility.

Visit us at:

We use cookies to make our website function properly and deliver our services. By using our website, you agree to our use of cookies, please click here to learn how to manage and delete cookies.