Will Audit Committees Get Serious?

Despite regulatory attempts over recent years to beef up the audit function in general, audit committees often are derided for lack of effectiveness. One paints a bleak picture, for example, demonstrating that audit committees are almost never called to account for their inadequacies -- never mind that, under Sarbox, auditors have been required since 2002 to disclose audit committee ineffectiveness.

Similarly, shows that companies -- especially top companies --- often are reluctant because of status-related concerns about hiring audit committee members with financial expertise, and are abetted in this reluctance by Securities and Exchange Commission rules. The rules, according to USC's take on things, allow plenty of wriggle room when it comes to defining this expertise.

But wriggle room or not, this expertise may soon come to audit committees -- albeit with companies kicking and screaming in the process -- thanks in part to a .

The proposals contained in this , which generated over , will push auditors into going well beyond the current "pass-fail" nature of their reporting, James Liddy, KPMG vice chair, audit, says during a . [Registration necessary.]

Although the PCAOB laid out a few alternatives in the release, all would involve the provision of an auditor's discussion and analysis, which would, in effect, evaluate the assertions made in a company's management discussion and analysis. In addition, auditors would have to provide assurance on other information outside of the standard auditor's report per se.