Audit committees hit a new level of transparency during the 2014 proxy season, going beyond mandatory disclosures to voluntarily provide information sought by investors regarding committee activities and oversight of external auditors, according to an EY analysis.

In a recent report of its findings, EY says the research shows a consistent move by Fortune 100 companies to enhance the depth and scope of audit committee-related disclosures to supplement mandatory disclosures with extra information that investors have demanded. The findings are based on an analysis of 80 companies in all that filed proxy statements for three consecutive years as of August 15, EY said.

“The data shows audit committees are working to tell their stories,” says Allie Rutherford, director of corporate governance at the EY Center for Board Matters. “They are better at explaining the important work they’re doing and communicating it with investors.” The analysis determined, for example, that some audit committees are centralizing their disclosures to make it easier for investors who are searching for audit-specific disclosures in the proxy statement. Some companies are making it easier for investors to find the audit committee charter, with 15 percent providing a direct link compared to only 6 percent two years earlier. A growing number of companies also are providing additional information about the audit committee’s oversight and decision-making process, EY said.

More companies are addressing the audit committee’s review and evaluation of external auditors, with nearly half explicitly stating their belief that their selection of the external audit firm is in the best interest of the company and/or its shareholders. Nearly half of companies also disclosed that the audit committee was involved in the selection of the firms’ engagement partner, and nearly one-third explained their rationale for appointing the audit firm. More than half of companies specified that the audit committee is responsible for the appointment, compensation, and oversight of the auditor, and 8 percent of companies went so far as to disclose the topics that the audit committee discussed with the auditor, beyond those that are required to be discussed.

Half of the companies reviewed disclosed how long the company has worked with the same audit firm, and more than one-fourth addressed the impact of rotating to a new audit firm. Only 8 percent acknowledged a change in fees to the external auditor and explaining why, and nearly 20 percent said the audit committee was involved in fee negotiations; 80 percent of companies said they consider non-audit services and fees when assessing the independence of the external auditor.

Audit committees are answering a call, but not a requirement, for increased disclosure coming from a number of fronts, including the Securities and Exchange Commission, the Public Company Accounting Oversight Board, the Center for Audit Quality, plus investor advocates and various policy-influencing organizations.

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