Huron Consulting Group Releases Audit Committee Research Report
at least one Accountant on Their Audit Committee in 2005
CHICAGO - November 28, 2006 - Huron Consulting Group (NASDAQ: HURN), a leading provider of financial and operational consulting services, today released its Audit Committee Research report based on a sample of more than 700 audit committee members at 178 public companies from the NASDAQ 100 and Fortune 100 listings.
"Despite an increase in the number of accountants on audit committees, they are still playing catch up to other categories of professionals. In fact, most people are very surprised to learn how few accountants are on audit committees," said Maureen Loftus, managing director, Huron Consulting Group. "Our report revealed that the number of accountants on audit committees doubled over the past four years. However, finance professionals exceeded accountants by 3 to 1 in 2005 and accountants and finance professionals represent less than half of all audit committee members."
Huron's Audit Committee Research report analyzed patterns of Audit Committee composition over a four-year period from 2002 to 2005 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 5% in 2002 to 11% in 2005.
- The number of audit committees with at least one accountant increased from 20% in 2002 to 38% in 2005.
- The majority of companies sampled (six out of 10 or 111 companies) did not have an accountant on their audit committee in 2005.
- While all companies reported having an audit committee member with financial expertise in 2005, only 23% of the designated financial experts had biographies indicating they had accounting backgrounds.
- Audit Committee members who are finance professionals exceeded accountants by 3 to 1 in 2005 (down from 5 to 1 in 2002).
- While the number of audit committee members considered accountants or finance professionals increased from 33% in 2002 to nearly 44% in 2005, audit committee members in the "other" category represented more than half of all audit committee members.
"A clear understanding of accounting is beneficial to companies and their boards of directors," said Joseph J. Floyd, managing director and practice leader, Huron Consulting Group. "Financial experts and accountants are in demand more than ever."
General Observations About Audit Committees
- Meetings - From 2002 to 2005, the average annual number of audit committee meetings nearly doubled from about five to 10 meetings during the period. There was a large increase in the frequency of meetings over the four-year period as companies struggled to make sense of new Sarbanes-Oxley regulations and increasingly complex accounting rules. While 57% of companies held nine or more meetings in 2005 only 4% of companies held four or fewer meetings in 2005.
- Retirees - The percentage of audit committee members who were employed full-time remained relatively constant, at about 62% to 63% from 2002 to 2005.
- Size - the average number of audit committee members has remained constant, at about four per company from 2002 to 2005.
- Age - The average age of audit committee members remained the same for each year at 60 years old.
In the report, the term "accountant" was categorized by title and experience, which included certified public accountants (CPA), controllers, accounting professors, and those who served on accounting standards or other similar boards. Copies of the report are available upon request or at http://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.
Jennifer Frost Hennagir, Director
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