Publicly traded companies are undergoing transformation due to the explosion of artificial intelligence, changing macroeconomic conditions, and evolving regulatory priorities. In response, the oversight responsibilities of audit committees have evolved to include new risk areas in addition to financial reporting and external auditor oversight.
Now in its 12th year, the 2025 Audit Committee Transparency Barometer, created in partnership with Ideagen Audit Analytics, provides a comprehensive look at how audit committees at S&P 1500 companies communicate their oversight responsibilities to investors. By analyzing these disclosure trends and incorporating the feelings of audit committee members themselves, Audit committee implementation reporta clear theme has emerged that although audit committees play an important role in overseeing key areas, proxy disclosure is largely stagnant. This “transparency gap” presents an opportunity for audit committees to better tell their story.
External Auditor Oversight: The Need for Customized Disclosures
Investors want to understand how the audit committee supervises external auditors, including selection of audit firm, compensation, evaluation and supervision, and selection of business partners. However, individual disclosures in this area have reached a plateau.
The following data from the Barometer highlights this stagnation in several key areas.
- 50% of S&P 500 companies discuss considerations when appointing external auditors, a number unchanged from 2024.
- Disclosure of audit committee involvement in external audit partner selection was only 53% compared to the same period last year.
Contextual disclosure is always important, but committees need to be especially transparent during times of turmoil and rapid change.
“The persistence of standard language may stem from a combination of legal conservatism and resource constraints. However, by defaulting to standard language, audit committees miss an opportunity to emphasize the robust and customized evaluation processes that committees conduct behind closed doors,” said Marie Pupecki of Ideagen Audit Analytics.
When disclosure is consistent with audit committee priorities
Although disclosures regarding core supervisory areas have plateaued somewhat, disclosure rates related to audit committee oversight of new risk areas remain consistent with audit committee priorities. This is an example of an area where the “transparency gap” is closing.
of Audit committee implementation report has listed cybersecurity as a top priority for audit committees over the next 12 months. The report also noted that 62% of audit committees primarily had oversight of cybersecurity risks.
This priority is reflected in our disclosures. The report found that 64 percent of S&P 500 companies explicitly state that cybersecurity oversight is the responsibility of the audit committee. Disclosing whether it is the audit committee's responsibility to oversee cybersecurity provides investors with additional transparency into how a company approaches the governance of this risk area.
Standardize “skill matrix”
A positive trend in governance disclosure is the prevalence of board skills matrices, which provide insight into both board composition and capabilities.
90% of S&P 500 companies disclose their skills matrix, up from 85% in 2024, responding to investors' desire to understand board composition and the expertise each member brings.
“What makes the Skills Matrix particularly effective is that it transforms abstract claims about board expertise into concrete and comparable data points. This template is currently being established for future competency categories, with AI governance being the next addition. “One thing is clear: As companies face increasing investor questions about AI strategy, risk management, and ethical deployment, boards will need to be clear about who brings AI-related expertise to these important oversight discussions,” Pupecki said.
Looking to the future
At CAQ, we know that transparency builds trust in capital markets. As audit committees steer toward 2026 and beyond, proxy statements continue to be a great opportunity to tell their stories.
“The most effective audit committees treat disclosure as a strategic communication opportunity rather than a compliance burden. Data-driven benchmarking allows boards to go beyond guesswork and understand where their company stands relative to its peers on key transparency measures, auditor oversight, risk management, “Whether it's an emerging issue like AI governance, committees using benchmark data can make informed decisions about where to enhance disclosure and ensure they're telling their governance story as effectively as they are delivering their work,” said Pupecki.
Explore more data from the Audit Committee Transparency Barometer and dig deeper into what the data reveals about today's evolving governance landscape. For additional support for audit committee members, check the Audit Committee Resource Center for the latest updates.
