The Sarbanes-Oxley Act of 2002 increased audit committeesâ€™ responsibilities and authority, and raised the bar on the independence of members. As a result, the SEC and the stock exchanges also proposed new regulations and rules to strengthen audit committees. A recent report by the KPMG Audit Committee Institute presents New Yearâ€™s guidance for audit committees and their upcoming 2010 agendas.
1. One of the points presented in the article is that audit committees need to monitor managementâ€™s assumptions underlying critical accounting estimates. Pension funding is included as one of these priorities. What are some of the estimates that impact pension funding?
2. In the articleâ€™s focus on financial communication, audit committees are urged to understand the companyâ€™s policy on the use of Twitter and other social media networks to reach investors. How could these networks impact earnings guidance?
3. In particular, the report urges audit committees to engage early on in reviewing 2010 proxy disclosures. What are contained within proxy disclosures?
WebCPA Staff. (2010). “KPMG Lists Top 10 Priorities for Audit Committees,” WebCPA (Retrievable online at http://www.webcpa.com/news/KPMG-Lists-Top-10-Priorities-Audit-Committees-52937-1.html)