The ups and downs in the economy during the novel coronavirus pandemic are causing audit committees at public companies to focus on the disclosures in their financial statements and SEC filings about the current and potential impacts of COVID-19, according to a new report from KPMG.
The report, Challenges Presented by COVID-19, found that companies are reassessing, enhancing or establishing new internal controls due to pandemic-related disruptions to their business operations. Meanwhile internal auditors are adjusting their audit plans and activities.
Paul Burrin is the Head of Insights and Evangelism, HR and Payroll at Sage.
As a co-founder and managing director of BrandCulture, Eric leads BrandCulture's strategy practice. Across his career, Eric has worked with big and small organizations alike to put their respective best feet forward through strategic branding, naming, print and digital media.
Prior to BrandCulture, Eric served in a variety of client- and agency-side executive positions, including Head of Corporate Affairs and Head of Strategic Marketing for LRN Corporation and Senior Vice President at global branding and interactive media consultancy Siegel + Gale. Earlier, Eric was an attorney with Wilson Sonsini Goodrich & Rosati in Palo Alto, where he specialized in representing technology clients.
Eric is an honors graduate of Harvard Law School, holds Bachelor's and Master's degrees from Stanford University where he was elected to Phi Beta Kappa. He also studied at St. Catherine's College, Oxford and the University of Urbino in Italy.
Jon is a pioneer in wedding the disciplines of strategic branding and culture development united in Shared Purpose. From the time he had the prescience to purchase the domain "BrandCulture.com" back in the last Millennium, Jon cultivated the idea of forming a new kind of agency that integrates brand and organizational development as the flip sides of the same coin. With BrandCulture now in its second decade, Jon takes singular satisfaction in finding that the world has, at long last, come around to his point of view.
Jon has previously held senior strategic and business development roles within Wolfgang Puck, Siegel + Gale, Imagination and Caribiner International, where his clients have included BMW, BEA Systems, Ford, The Coca-Cola Company, Holiday Inn Worldwide, Jiffy Lube, Lexus, Motorola, Philips Electronics and other global organizations.
Jon serves on the board of the Michael Hoefflin Foundation and holds a BS in Finance from the University of Wisconsin La Crosse and an MS in Real Estate and Urban Affairs from J. Mack Robinson College of Business at Georgia State University.
Forecasting has become more challenging, including developing assumptions for the recoverability of goodwill and nonfinancial assets, as well as the realizability of deferred tax assets, making going-concern determinations and figuring other asset impairments more difficult, according to the report.
Nevertheless, audit committees are adapting to the new environment, as their companies allow more flexibility for remote work. Among the biggest areas of concern cited by the 114 U.S. audit committee members polled by the KPMG Audit Committee Institute are disclosures about the current and potential effects of COVID-19 (79 percent), preparation of forward-looking cash flow estimates (48 percent), and impairment of nonfinancial assets such as goodwill and other intangible assets (43 percent).
Audit committee members indicated that the remote work environment accelerated by COVID-19 has so far had little impact on the efficiency and effectiveness of their interactions with the management team and auditors.
Companies are reassessing their internal controls in response to COVID-19-related disruptions to their business operations. The most commonly cited disruptions included return-to-work plans (73 percent), IT system access and authentication for remote workers (69 percent) and cybersecurity (66 percent).
Audit committee members expect some environmental, social and governance issues to get much more attention from boards as a result of COVID-19 and recent protests against systemic racism. Survey respondents cited employee health, safety and well-being (85 percent), diversity within the company including the boardroom (53 percent) and corporate reputation (39 percent) as areas of greater focus for boards.
The pandemic has also caused many audit committees to reassess the scope of their workload agendas in addition to their risk oversight responsibilities. Most audit committee members who responded to the survey cited oversight responsibilities for a variety of COVID-related risks, including financial risks (83 percent), legal and regulatory compliance (70 percent), cybersecurity (62 percent) and data privacy (42 percent).
