2018 Audit Committee Outlook for Technology

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Technician fixing cables on a serverThe information technology industry exists in a constant state of transformation. New product cycles are measured in weeks and months—no longer in years…and the pace of change is accelerating. Technological change permeates every department from product development through customers support and every function from finance to human resources. Directors and management must be constantly vigilant as “disruptors” can quickly become the “disrupted.”

In today’s world, technology is a ubiquitous part of business and consumer lives. The information managed, processes enabled, and supporting analytics are “musts” to compete. This has drawn the attention of regulators, raising the hurdles and costs for compliance. And it has also drawn the attention of criminals and hackers, raising the thresholds and costs of security and privacy.

This new environment challenges executives and directors to manage competitive risks, minimize regulatory and tax difficulties, and drive “customers-for-life.” New tax laws, accounting rules, and risk strategies demand that audit committee members be more engaged than ever before. Our goal with this publication is to provide you a high-level review of current concerns facing audit committees that serve technology companies in order to help you focus on areas that may need increased oversight.

In particular, tax changes will drive much of the focus on key issues that directors need in 2018. Several provisions will affect the technology sector, including the reduction of the corporate tax rate, full expensing for asset purchases, R&D credit changes, repatriation of earnings held overseas, the Base Erosion Anti-Abuse Tax (BEAT), and others. Beyond 2018 these changes beg questions of appropriate corporate structures to support international operations. More information on the pivotal issues is provided in the following chapter on tax reform.

Download our 2018 Audit Committee Outlook for Technology to understand how recent and near-future developments impact corporate financial reporting and disclosure.