In a Securities and Exchange Commission (SEC) concept release issued earlier this month, the SEC requested the public’s input on more than 70 questions surrounding the sufficiency of current disclosure requirements on audit committees, which were primarily adopted in 1999 in Item 407 of Regulation S-K and supplemented by the Sarbanes-Oxley Act of 2002. The deadline is September 8, 2015, to submit comments to the SEC. A handful of comment letters have been posted to the SEC’s website so far and generally affirm the value of independence and integrity of a company’s auditors and the audit committee’s role, but also caution against creating additional forced boilerplate in SEC filings.
The SEC noted its concern over the ability of the public and investors to evaluate the transparency of an audit committee’s performance of its duties with respect to auditor oversight, auditor appointment and retention, and auditing firm and audit team qualifications under the current disclosure regime. It is also seeking feedback on disclosure placement in SEC filings and the application of disclosure rules on smaller reporting companies and emerging growth companies.