PwC provides top 10 questions for audit committees
PwC US's Center for Board Governance has announced its annual list of questions and insights to help audit committees oversee their companies' 2010 year-end financial reporting process. Topics covered include: accounting and disclosure matters, the impacts of the proposed SEC rule for a whistleblower bounty program, antitrust and anticorruption compliance, tax reform, and ongoing standard setting, and regulatory matters, among others.
"This is an important time of year for audit committees, as they consider how best to oversee their companies' year-end financial reporting processes," said Catherine Bromilow, a partner in PwC's Center for Board Governance. "With an active regulatory environment and a fragile economic recovery, PwC's insights can help audit committees sort through some of this year's more complex reporting issues."
PwC's top ten year-end questions for audit committees include:
Accounting and disclosure
- How is management addressing accounting issues such as credit quality disclosures, asset impairments, pensions and other postretirement benefit plans, and revenue recognition considering today's economy and changing accounting standards?
- How is management focusing on ensuring transparency in the company's disclosures about loss contingencies, liquidity and capital resources, non-GAAP measures, and segment reporting?
- How is management ensuring the timely and adequate documentation of its judgments regarding accounting estimates and complex accounting matters?
- How is management assessing the company's internal control effectiveness, considering such factors as changes in its business model, possible changes in fraud risks, and resource constraints?
- How can the audit committee continue to improve its oversight of the company's risk management program, including the important linkage between compensation and risk?
- Has management considered the impact of the SEC's proposed whistleblower program rule on its internal compliance program?
- Considering the significant focus regulators and judicial authorities are placing on anticorruption and antitrust compliance, what steps are being taken to ensure the company's compliance in this area?
Ongoing standard setting and regulation
- Is management preparing for the significant accounting and reporting changes caused by the convergence of U.S. GAAP and International Financial Reporting Standards (IFRS)?
- How is management planning to address the requirement to disclose uncertain tax positions to the IRS and assess the impact of potential changes in tax policy?
- As changes to laws, regulations, and accounting and auditing standards are proposed and implemented, is management analyzing the possible effect on the company and providing comments on those topics of greatest relevance to the company?
The full report provides insights for audit committees to consider on each of the topics. The questions in the report should be considered along with other questions audit committees determine to be important, given the specific facts and circumstances of the companies they serve.