On 1 July 2015, the SEC published a "concept" release to solicit input on possible revisions to audit committee reporting requirements, with a focus on the audit committee's reporting of its responsibilities with respect to its oversight of the independent auditor. Some have expressed a view that the SEC's disclosure rules for this area may not result in disclosures about audit committees and their activities that are sufficient to help investors understand and evaluate audit committee performance, which may in turn inform those investors' investment or voting decisions.
The majority of the SEC's current disclosure requirements relating to audit committees, which are found principally in Item 407 of Regulation S-K, were adopted in 1999. Since then, there have been significant changes in the role and responsibilities of audit committees arising out of, among other things, the Sarbanes-Oxley Act of 2002, enhanced listing requirements for audit committees, enhanced requirements for auditor communications with the audit committee arising out of the rules of the Public Company Accounting Oversight Board, and changes in practice, both domestically and internationally.
The SEC also invited public comment on other aspects of the audit committee's role beyond those involving the auditor, such as its oversight of financial reporting, internal controls and risk.
The period during which the public could submit comments on the concept release ended on 8 September 2015, and a significant volume of comment letters were submitted by reporting issuers, institutional shareholders, industry groups, law firms and other stakeholders. After considering the comments received, the SEC may proceed with a rulemaking proposal, on which there would be another round for public comment before a final rule is adopted.
The SEC's concept release is available at:
http://www.sec.gov/rules/concept/2015/33-9862.pdf
Comments on the concept release are available at:
http://www.sec.gov/comments/s7-13-15/s71315.shtml
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