While skills matrix disclosure continues at high rates and disclosure of cybersecurity expertise on public company boards of directors has grown, most disclosure areas have stagnated or declined, providing audit committees with an opportunity to enhance transparency about their evolving oversight responsibilities, the Center for Audit Quality says in a new report.
The CAQ and Ideagen Audit Analytics released the 12th annual Audit Committee Transparency Barometer Report on Dec. 4. The report, which has been conducted since 2014, analyzes audit committee disclosures of companies in the S&P 1500.
The roles and responsibilities of the audit committee are ever evolving and, in many cases, extend beyond oversight of financial reporting and the external auditor, the report says. It continues:
Public companies face disruption due to factors such as inflation, labor market changes, tax and trade policies, the rapid adoption of artificial intelligence (AI) and other advanced technologies, increased cybersecurity threats, and changing regulations. Audit committees are called upon to leverage their skills and experience in oversight of financial reporting and internal controls to oversee these emerging risks. These topics are multi-faceted and rapidly evolving, necessitating the audit committee to be nimble. A recent publication from Deloitte, The Audit Committee Chair of the Future: Redefining leadership for the next era of governance, indicates that audit committee chairs need to be prepared to lead through emerging risks, evolving the committee from technical to strategic experts, cultivating curiosity and learning throughout the committee, and modernizing committee processes for agility. This will enable the audit committee to continue to effectively exercise its oversight through periods of transformation. While disclosure of audit committee oversight responsibilities is always important, during periods of disruption and with the rapid evolution of the role of the audit committee, it is especially important for committees to increase transparency regarding how their oversight responsibilities are changing.
The results in 2025 show stagnation in most areas of disclosure, and therefore, we encourage audit committees to consider opportunities to enhance disclosures in future filings—especially to capture changes in oversight, board composition, and how boards are evolving to address the ever changing environment.
“When disruption accelerates, disclosures cannot stand still,” CAQ CEO Julie Bell Lindsay said in a statement. “Audit committees perform a key role in our capital markets, from overseeing the external auditor to monitoring company financial reporting and internal controls and serving as an effective check on management. Meaningful, investor-focused disclosure is one of the most powerful tools audit committees have to tell their story and demonstrate this important role. Each proxy season presents an important opportunity for audit committees to more clearly communicate how they oversee risk and uphold audit quality, strengthening investor confidence in a rapidly changing environment.”
The report says a skills matrix is a helpful tool in evaluating the overall competency of the board to ensure it’s equipped with the skills needed to exercise effective oversight. This disclosure provides transparency for stakeholders.
Most proxies—90% of S&P 500 companies—disclose a skills matrix for the board of directors, up from 85% in 2024, according to the report. There are high rates of disclosure among S&P Midcap and Small Cap companies, as well, at 80% and 70%, respectively in 2025, both up slightly from 2024.
Recommended Articles
Tamar Elkeles, Ph.D., who is director and chair of the governance committee of The Glimpse Group, director and chair of the compensation committee of OpenSesame, and senior advisor of East Wind Advisors, told Directors & Boards magazine last June that over the last five years, several skills have emerged as essentials for any board’s skills matrix, reflecting changes in technology, governance, and board expectations. Those skills include digital literacy, including the understanding of digital technologies, cybersecurity, and data analytics; regulatory knowledge, especially in areas like data privacy, labor laws, and corporate governance; and human capital, through which directors can gain expertise on attracting and retaining top talent, investing in employee development, and fostering a culture of high performance and productivity.
“These skills reflect the evolving landscape of corporate governance and the increasing complexity of the business environment,” she said. “Boards that prioritize developing these competencies are better positioned to lead their organizations successfully.”
A couple of other key findings from the CAQ/Ideagen Audit Analytics report include:
- 65% of S&P 500 boards disclosed they have a cybersecurity expert—representing a 5-percentage-point increase from 2024.
- Stagnation and decline of audit committee disclosures were observed across several measures, including (for S&P 500 companies): disclosure of the annual evaluation of the external auditor (decreased from 39% to 38%); considerations in appointing or (re)appointing the external auditor (remained flat at 50%); and factors contributing to the selection of the audit partner (decreased from 17% to 16%).
“As audit committee responsibilities continue to expand, the Audit Committee Transparency Barometer provides critical insights into how committees are adapting their disclosures and where there is room for improvement,” said Michael Nohrden, vice president of strategy, audit and risk for Ideagen. “Our ongoing collaboration with the CAQ ensures audit committees have access to robust data and peer comparisons across the S&P 1500, empowering them to strengthen their communications with stakeholders. With emerging risks like AI adoption and cybersecurity threats reshaping oversight responsibilities, transparent disclosure has never been more important.”
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
