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.
Mike DePrisco is president and CEO of the Institute of Management Accountants. Since joining the IMA in April 2023, DePrisco has led the development and implementation of a new vision and strategy designed to broaden the organization's relevance and reach, enhance member experiences, and strengthen IMA's role as a catalyst for professional growth and leadership. Prior to the IMA, DePrisco spent a decade at the Project Management Institute where he served as chief operating officer and interim president and CEO. DePrisco serves on the AAA Foundation Board and is co-chair of the Future Accountant Stakeholder Organization. He is also a member of the CEO Update executive roundtable program, advocating for the future of accounting and management professions. His leadership has been recognized through inclusion on Accounting Today's Top 100 Most Influential People in Accounting and NJBIZ's Power 50 in Accounting lists.
Emily McGinn is the general manager of the MGA business unit at Vertafore. McGinn is a seasoned business and technology leader and has driven growth and transformation across finance, operations and digital initiatives. Previously, McGinn held senior roles at Windstream, Lumen Technologies and Zayo Group, where she led large teams, improved efficiency and fostered innovation.
Natasha Holiday is Managing Director, Co-Head of Infrastructure East, RBC Capital Markets, where she structures debt and sells bonds in the public markets to raise capital on behalf of large city and state governments to fund public infrastructure. She served as MSRB Board Chair for the 2026 fiscal year.
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).
