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.
Ben Zatlin serves as Vice President and General Manager of Agero's Accident Management business, a role he began in September 2021. Prior to leading the Accident Management line of business, Ben spent the previous two and a half years leading Agero's digital transformation to Swoop, its next-generation dispatching platform. He is passionate about leveraging technology to drive claims innovation and deliver consistent, high-quality service. Prior to Agero, Ben was a management consultant at professional services firm Deloitte and an operations engineer at life sciences company Abbott Laboratories. He holds a BA in Biomedical Engineering from the University of Southern California and an MBA from Harvard Business School.
Justin Berman is a Technical Director at Skybox Security. Berman is a Certified Information Systems Security Professional (CISSP) and Certified Cloud Security Professional with a Certified Specialty in AWS Security with over 20 years of experience.
Justin has a passion for IT security beyond the realm of his assigned roles and responsibilities. He is knowledgeable across a great number of security disciplines.
As the General Manager of Dayforce Wallet & Consumer Services at Ceridian, Seth Ross brings nearly 20 years' of experience to oversee the development, launch, and implementation of Dayforce Wallet, Ceridian's market-leading pay solution that enables employees to access their earned wages at any time.
Prior to joining Ceridian, Ross led Green Dot Corporation's Banking-as-a-Service business, where he helped build new, embedded financial services businesses with partners like Apple, Uber, Intuit, Stash and others. Before that, he led the global airline partnerships strategy for American Express and helped launch Amex Advance, a division focused on data commercialization.
Ross holds a bachelor's degree in Business Administration from Ivey Business School at Western University in London, Ontario, and an MBA from Harvard Business School.
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).
