Research results released this fall show that accountants in leadership positions within audit committees has risen dramatically compared to just a few years ago.

"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 Consulting Group 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.

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.

Key findings in the research include:

• The number of audit committee members who were accountants doubled from 6 percent in 2002 to 12 percent in 2006.
• The number of audit committees with at least one accountant increased from 21 percent in 2002 to 40 percent in 2006.
• Only 22 percent of the designated financial experts had biographies indicating they had accounting backgrounds in 2006, a minimal decline from the previous 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 percent in 2002 to 47 percent 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 percent in 2002 to 23 percent in 2006, while the number of audit committee chairpersons considered "finance professionals" remained flat from 2002 to 2006 at approximately 40 percent.

"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."

The report also includes some general observations on audit committees, including:

• 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 percent of companies held nine or more meetings in 2006, only 3 percent 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 percent 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.

Download a copy of the report from Huron Consulting Group.

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