Public Company Accounting Oversight Board Re-Proposes Auditor Reporting Standard to Enhance Auditor Reports
On May 11, the Public Company Accounting Oversight Board (PCAOB) re-proposed its standard for information that auditors are required to provide in their audit opinions. As noted in its press release regarding the re-proposed standard, the PCAOB desires to make auditor’s reports more informative for investors. In 2013, the PCAOB proposed a standard that would require a firm to disclose in its audit reports critical audit matters arising from an audit of an issuer’s financial statements. The PCAOB received extensive comments in response to its original proposal and held a public roundtable to discuss the previously proposed standard and comments received. As a result, the PCAOB has re-proposed the standard with modifications to its original proposal.
In the re-proposed standard, the PCAOB would not change the pass/fail model of the existing auditor’s report or the auditor’s role of attesting to management-prepared information. Under the re-proposed standard, the PCAOB would, however, require auditors to provide additional information in the auditor’s report regarding critical audit matters (as modified from the original proposal in 2013). The re-proposed standard, among other things, would limit the source of potential critical audit matters to matters communicated (or required to be communicated) to the audit committee and narrow the definition of critical audit matters, from the definition originally proposed, to those matters involving “especially challenging, subjective or complex auditor judgment.” Comments on the re-proposed standard are due by August 15.
The PCAOB’s press release regarding its re-proposed standard is available here.
The PCAOB’s report on the full re-proposed standard is available here.
A fact sheet on the re-proposed standard is available here.