Public companies’ board members are focusing more this year on the communication and transparency of financial reporting and disclosures, the new 2020 Board Pulse Survey from BDO reports. Of the 280 public company board members surveyed, 73 percent say they have increased disclosures around new and emerging risks to their business. A quarter of respondents have added new disclosures around their use of government assistance programs in the wake of COVID-19, including the Paycheck Protection Program, Main Street Lending Program, and the Payroll Support Program for airlines.
Nearly half of the survey’s respondents say they have significantly increased the time or effort devoted to accounting estimates and forecasts. Additionally, 42 percent increased disclosures around liquidity, 28 percent considered disclosing asset impairments, and 19 percent considered additional income tax effects in their disclosures.
“I think disclosures have a big impact,” said Amy Rojik, national assurance partner and director of BDO’s Center for Corporate Governance and Financial Reporting. “Early on at BDO, we hit the ground running in March working with our clients on disclosures, particularly with all of the capital being infused by the government, what that looked like and how that was being portrayed to the public, so they could better understand the access to capital for many companies, and disclosing those risks and uncertainties. You’re seeing a lot more disclosure by companies around emerging risks, not necessarily just liquidity, but also what happened with supply chain access, what’s happened with safety of employees, and how that’s all being handled. There’s notably increased time and effort related to accounting estimates, particularly forecasts, for many companies that are teetering on whether or not they’re an ongoing concern.”
The COVID-19 pandemic had a widespread impact on employees, customers, and vendors, and 71 percent of survey respondents say that ensuring these groups’ safety was a key priority for their organizations this year. New or expanded workplace safety procedures are in place at 87 percent of respondents’ companies. Half of the board members say their organizations plan to commit to longer-term remote work arrangements for some employees. More than one-third of respondents had to lay off or furlough workers during the pandemic, and 61 percent say there were high or moderate levels of disruption in staffing and productivity as employees transitioned to remote work.
Looking ahead, 45 percent of the surveyed board members say building a more diverse board and leadership team will be a top priority. Restoring and retaining shareholder confidence is a significant governance challenge for the end of 2020, say 22 percent of respondents. 
Elizabeth Mullen is an editorial consultant for Internal Audit 360°.