Huron Consulting Group (NASDAQ:HURN), a leading provider of financial and operational consulting services, today released its second annual Audit Committee Research report based on a sample of more than 670 audit committee members at 164 public companies from the NASDAQ 100 and Fortune 100 listings.
“Over the past five years, the number of accountants sitting on audit committees has doubled from six to 12 percent. Their power within these committees has also increased, with 23 percent of all committee chairpersons listed as an accountant, up from less than ten percent in 2002,” said Maureen Loftus, managing director, Huron Consulting Group. “But the news is still mixed for accountants, as they are three times less likely than finance professionals to sit on an audit committee at all.”
Huron’s Audit Committee Research report analyzed patterns of audit committee composition over a five-year period from 2002 to 2006 using information contained in the companies’ annual proxy statements and 10-K disclosures filed with the U.S. Securities and Exchange Commission.
Accounting for Accountants on Audit Committees
- The number of audit committee members who were accountants doubled from 6% in 2002 to 12% in 2006.
- The number of audit committees with at least one accountant increased from 21% in 2002 to 40% in 2006.
- Only 22% of the designated financial experts had biographies indicating they had accounting backgrounds in 2006, a minimal decline from last year.
- Audit committee members who are finance professionals exceeded accountants by less than 3 to 1 in 2006 (down from 5 to 1 in 2002).
- Although the number of audit committee members considered accountants or finance professionals increased from 34% in 2002 to 47% in 2006, audit committee members in the “other” category still represented more than half of all audit committee members.
- Audit committee chairpersons, whose biographies indicated they had accounting backgrounds increased from less than 10% in 2002 to 23% in 2006, while the number of audit committee chairpersons considered “finance professionals” remained flat from 2002 to 2006 at approximately 40%.
“Accounting professionals are clearly in high demand by the business world,” said Joseph J. Floyd, vice president and practice leader for the Financial Consulting practice, Huron Consulting Group. “More than ever, businesses are making sure that accountants are involved with or leading audit committees.”
General Observations on Audit Committees
- Meetings - From 2002 to 2006, the average annual number of audit committee meetings doubled from about five to ten meetings during the period. The average number of audit committee meetings was 10 in 2005, indicating that frequent meetings seem to be the norm as companies continue to deal with Sarbanes-Oxley regulations, greater oversight from the audit committee, and increasingly complex accounting pronouncements. While 60% of companies held nine or more meetings in 2006, only 3% of the companies sampled held four or fewer meetings in 2006.
- Retirees - The percentage of audit committee members who were employed full-time remained relatively constant, at about 64% from 2002 to 2006.
- Size - The average number of audit committee members has remained constant, at about four per company from 2002 to 2006.
- Age - The average age of audit committee members increased slightly from 60 in 2002 to 61 in 2006.
In the report, the term “accountant” was categorized by title and experience, which included certified public accountants (CPA), controllers/comptrollers, accounting professors, and those who served on accounting standards or other similar oversight boards. The “other” category was used to describe an audit committee member who was not an accountant by training or experience and was not a finance professional such as a chief financial officer, treasurer, or financial professor.
Copies of the report are available upon request or at www.huronconsultinggroup.com.
About Huron Consulting Group
Huron Consulting Group helps clients effectively address complex challenges that arise in litigation, disputes, investigations, regulatory compliance, procurement, financial distress, and other sources of significant conflict or change. The Company also helps clients deliver superior customer and capital market performance through integrated strategic, operational, and organizational change. Huron provides services to a wide variety of both financially sound and distressed organizations, including Fortune 500 companies, medium-sized businesses, leading academic institutions, healthcare organizations, and the law firms that represent these various organizations. Learn more at www.huronconsultinggroup.com.
Contacts:
Jennifer Frost Hennagir,
312-880-3260
jfrost-hennagir@huronconsultinggroup.com
