Leadership
A Doozy for Disclosures
Say goodbye to boilerplate, generic language that has been a staple of many board audit-committee reports. Tariffs are forcing a high-stakes reporting game.
June 30, 2025
Audit committee oversight is changing amid economic uncertainty
If you pay attention to financial disclosures, chances are you’ve noticed that some quarterly filings have looked a bit different lately. A power-tool manufacturer, for example, reported it increased prices on products. An automaker disclosed that it was going to adjust its product strategy and try to localize supply chains and increase sourcing from North American partners. And a toymaker said it was pausing its 2025 guidance entirely.
In the current environment of on-again, off-again tariffs and market uncertainty, audit committees are being pushed to keep an eye on key aspects of financial reporting and disclosure—particularly around the impact of tariffs. An issue that was once confined to the operations or supply-chain corner has crept into the financial realm, affecting investor disclosures and enterprise risk management. “The tariff uncertainty requires the audit committee to think through a different lens than in the past,” says Daniel Goelzer, a founding member of the Public Company Accounting Oversight Board (PCAOB).
Indeed, in a recent report, global accounting firm BDO updated its financial reporting recommendations around tariffs. It advised that disclosures should “be tailored to the entity’s facts and circumstances, rather than generic.” BDO added that the U.S. Securities and Exchange Commission could comment on disclosures that “inappropriately commingle tariff considerations into one risk, uncertainty, or effect.”
To that end, experts say CFOs and controllers, with the guidance of audit committees, are updating their risk-factor language beyond the boilerplate “global economic uncertainty” clause that often appears in company disclosures. Some are providing more specific language around key revenue streams or customer segments that could be impacted by tariffs. It’s also important for companies to articulate when there won’t be any risk changes—and to explain in such cases how they reached that conclusion. “There may be some increased disclosures in company financial statements where there has been erosion in margin or other financial metrics due to tariffs,” says Jeff Constable, senior client partner and co-leader of Korn Ferry’s Global Financial Officers practice.
To be sure, many of the disclosures will be handled by CFOs and (as Constable notes) external audit firms, with the board’s audit committee typically signing off on them. But it’s important for audit committees to factor tariffs and interest rates into overall enterprise risk management, Constable says, “since they represent challenges to the market-risk framework of the company.”
Risks to revenue timing could also be in play. If a new supply chain results in delivery delays or customers cancelling orders, quarterly revenue will be impacted, along with profitability forecasts. And while tariffs may seem like a policy issue, experts say they have real consequences for financial accuracy and investor trust. Audit committees that fail to disclose risk appropriately will fall behind not only on compliance, but also on credibility. "Enterprise risk management is a top area of concern for audit committees," Constable says.
Learn more about Korn Ferry’s risk management services.
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