Heads Up for the 2018 10–K and Proxy Season: Key Issues for the Audit Committee

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Audit committees have a lot on their collective plate as 2018 unfolds. The importance of their oversight role under the federal securities laws has been magnified by the sweeping changes in U.S. federal tax law and accounting standards, which either became effective on January 1, 2018, or loom on the near horizon. Investor and regulatory perceptions of audit committee and management performance in the New Year may turn, in significant part, on how effectively companies implement certain New GAAP standards (primarily revenue recognition and leases) and apply existing GAAP in a disruptive global environment. Other areas of audit committee oversight responsibility likely to attract critical scrutiny this year include the impact of tenure on the independence of the outside auditor, cybersecurity risk management and disclosure, and the perennial SEC hot button, management’s use of non-GAAP financial measures to communicate with investors.

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