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.
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With more than 30 years of experience championing causes that inspire social change through sports, entertainment, and pop culture, Lou Raiola is the industry's go-to resource when it comes to uniting stakeholder groups in collective efforts to drive positive social impact. He is also a leading advocate for the adoption of ESG within all types of organizations and is a leading expert on ESG strategy for supply chain stakeholders often speaking on the topic he describes as "The ESG Ripple Effect".
Nicole Stelter, Ph.D., is the director of Behavioral Health at Blue Shield of California, a nonprofit health plan with more than $22 billion in annual revenue serving 4.7 million members in the state's commercial, individual, and government markets.
Stelter plays a key role in implementing Blue Shield's Behavioral Health Reimagined strategy. She is also responsible for providing behavioral health and market/provider expertise across Blue Shield of California's behavioral health initiatives, with a focus on commercial lines of business.
Stelter has more than 30 years of behavioral health experience, most recently serving as Kaiser Permanente's director of National Strategic Customer Engagement, Specialty Consulting for Mental Health, and Health Equity. In this role, she led the company's total workforce health portfolio, including providing internal and external consultation and product development for mental health, occupational health, wellness, Employee Assistance Programs (EAP), and disability management services.
Stelter holds a bachelor's degree in Psychology and a master's degree in Counseling Psychology from California State University-Dominguez Hills and she earned a PhD degree from Capella University in Minneapolis.
Stelter is a licensed marriage and family therapist, a clinical trauma professional, and holds certifications in community/organizational disaster mental health. Her clinical focus has been with the first-responder community (police and fire), and she served as a behavioral health officer in the California Army National Guard (State Guard/Reserves) from 2010 to 2015.
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).
