This is an excerpt from the November/December issue of the Center for Audit Quality's Audit Committee Insights newsletter series. Read the full version of this month's newsletter here. Subscribe Check out this newsletter series for the latest updates and resources for audit committee members.
we dashed line We are evenly matched until the end of the year. Walk through a winter wonderland in Washington DC this December. This edition of Audit Committee Insights is packed with resources published by stakeholders. Oh, what fun! It was come to town To keep audit committees informed this holiday season, we have a fresh collection of regulatory updates, stakeholder resources, and hot topics. Read below for the latest information.
It’s the most wonderful time of the year: CAQ releases 2025 Audit Committee Transparency Barometer
12th Annual Edition Audit committee transparency barometer Here, in collaboration with Ideagen Audit Analytics, we analyzed public company audit committee disclosures of S&P 1500 companies. This report includes analytical data for 2025, examples of good disclosure, key audit committee practices and report samples, and questions to consider when preparing audit committee disclosures.
Key findings for 2025 include:
- 90% of S&P 500 companies publish their board skills matrix, up from 85% in 2024. S&P midcap companies (80%) and S&P smallcap companies (70%) also showed modest increases.
- 65% of S&P 500 boards say they have a cybersecurity expert, an increase of 5 percentage points from 2024.
- Stagnation and decline in audit committee disclosures (for S&P 500 companies) were observed across several metrics, including: Disclosure of the external auditor's annual evaluation (reduced from 39 percent to 38 percent). Considerations when appointing or (re)appointing external auditors (stable at 50%). Factors contributing to audit partner selection (decreased from 17 percent to 16 percent).
As the role of audit committees continues to evolve and the landscape continues to be turbulent, maintaining robust disclosure is essential. We encourage audit committees to take advantage of the opportunity provided by proxy notices to disclose how they are carrying out their oversight responsibilities.
Read the findings and take a closer look at the examples here.
PCAOB Board Member Christina Ho Announces Retirement
On December 1, board member Christina Ho announced that she will retire from the PCAOB by the end of January 2026, after more than four years. Board member Mr. Ho currently occupies one of the two CPA seats on the Board. Read her full statement here.
AI in the Boardroom: Insights into Corporate Oversight and Committee Operations
CAQ new resources The role of the auditor in AI: present and futureprovides new questions for boards to consider in their oversight of AI. If your audit committee has AI oversight responsibilities, this is a must-read. This resource also suggests questions about the current state of AI within your company, your strategic goals related to AI trust and transparency, and how your company plans to achieve those goals.
Deloitte reiterates these focus areas with our latest resources Agile AI governance in the boardroom This is a compilation of highlights and practical guidance from interviews with nine board members from a variety of industries focused on AI governance.
In addition to considering your company's responsible use of AI, have you considered how to responsibly introduce AI into your board's work? At PwC, we have many ideas for how to integrate AI into your board's processes and workflows. Here are a few:
- Put the use of AI in the boardroom on the agenda. Boards should formally include the use of AI on their agendas to foster thoughtful discussion about how directors are currently leveraging AI. This discussion could include whether AI is used to generate queries, perform scenario modeling, take minutes, or even act as a virtual observer during a meeting.
- Enabling safe use of AI: Any board-related use of AI must occur within a company-approved secure environment. The use of private or public platforms can create significant challenges in tracking and documenting board activities.
- Maintain human oversight: Outputs from AI run the risk of “hallucinations” or outputs that sound plausible but are not based on fact. There must always be a “stakeholder” and decisions must be made consistently by the directors.
- Preparations to ensure transparency for investors: As AI becomes a more important tool in board decision-making, investors may begin to question how AI is being used in governance processes. Boards should be prepared to articulate their approach, including how AI will inform oversight.
Emerging technology: What you need to know about quantum computing
While advances in AI are undoubtedly at the forefront of the minds of those in charge of governance, quantum computing is following close behind, or should be. the classic computer bit IBM points out that quantum computing uses (codes of 0 and 1) to process and store data. quantum bit works like a bit Save 0 or 1. quantum bit You can also combine weights of zero and one at the same time.
This unlocks immense potential to revolutionize performance, efficiency, reliability, sustainability, and more across industries, with quantum computing vendors predicting tangible business benefits by 2030. PwC highlights some specific use cases in its resources. Quantum Computing: How Companies Can Prepare for the Future Deloitte explores four potential scenarios that businesses should consider to help leaders prepare their quantum computing readiness strategies.
This progress comes with risks. An article by Grant Thornton suggests that quantum computing will be able to break common encryption methods used for cybersecurity and data privacy within the next few years. Although boards do not need to become quantum experts, they suggest that boards should be prepared to have knowledge and familiarity with quantum computing by the end of 2026. Oversight of quantum risks, including related cybersecurity risks and data retention, may become a board responsibility in the future.
Audit committees are increasingly responsible for cybersecurity oversight, making this a new area of focus.
Three ways audit committees can foster a culture of fraud tolerance
Participants at the Anti-Fraud Collaboration's second Fraud Forum emphasized that with the rapid advancement and adoption of technology, maintaining a strong ethical culture is even more important to effectively deter and detect fraud. The forum was held in November in partnership with CAQ and brought together stakeholders from across the financial reporting ecosystem, including boards of directors. Read a summary of the key themes discussed during the event here.
BDO's recent articles A practical guide to board oversight of misconduct, This reiterates the importance of a strong ethical culture and highlights the important function of audit committees in cultivating compliance, integrity and accountability to deter fraud within companies. They suggest three ways audit committees can play a role in establishing, maintaining, and promoting a zero-tolerance culture for fraud.
- Make it visible and accessible to stakeholders and have protocols for escalation and communication of information to the board.
- We will promptly and thoroughly address any conduct or communication that does not align with our company's code of conduct or culture. Have a protocol that describes how to identify and respond to these instances.
Speak in a consistent, unified voice. Establish clear communication roles and responsibilities for interactions with stakeholders.
