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.
Scott Hanson is a senior partner and founding principal of Allworth Financial. A nationally recognized financial expert, he has been listed as one of the 25 most influential people in the financial services industry nationwide.
Under Scott’s direction, through a combination of both organic expansion and acquisition, Allworth Financial has grown to over $8 billion in assets under administration. Over the past two years, Scott and his business partner have introduced Allworth into over 17 markets, growing the company’s service offerings to now include tax planning, accounting, and estate planning guidance.
With over 30 years of financial sector experience, Certified Financial Planner™ Mark Shone is an advisor in Allworth Financial’s Walnut Creek office.
Mark has a degree in Finance from California State University, Sacramento, and has completed the certificate in taxation from UCLA and financial education courses at the Wharton School.
A sought-after speaker at financial education conferences, in his free time, Mark enjoys golf and plays the drums in a Bay Area band. As for his advisory philosophy, he said: “Helping people reach their financial goals is something I take very seriously, and I make it my mission to provide clients with the same level of advice and care that I would give to a member of my own family.”
Simon Hoyle is an independent financial advisor recruiter He helps advisors' practices and clients maximize their net. He is responsible for consulting with financial advisors with a broad range of focuses, bringing them to a better place while revealing unknown broker dealer and RIA benefits in the marketplace. Also, Simon provides valuable insight and metrics to buying and selling financial practices, including the why and how of remote client opportunities.
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).
