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July 09, 2020

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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.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume VI, Number 141

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About this Author

Mark D. Wood, corporate securities lawyer Katten Muchin Chicago Law firm
Partner

Mark D. Wood is head of Katten's Securities practice and concentrates in corporate and securities law. Mark represents public companies, issuers and investment banks in initial public offerings (IPOs) and other public offerings, private investment in public equity (PIPE) transactions, debt securities and other securities matters.

Mark also represents clients in complex corporate transactions, including tender offers, mergers, acquisitions, dispositions, going-private transactions, private equity investments, joint ventures and...

312-902-5493
Mark Reyes Securities Lawyer Katten Muchin law firm Chicago office
Partner

Mark J. Reyes concentrates his practice in corporate and securities matters, including representing issuers and investors in public offerings and private placements of equity and debt securities and advising clients in complex corporate transactions such as mergers, acquisitions, private investments in public equity (PIPEs), private equity investments and joint ventures. He also counsels public companies on securities law compliance, disclosures and corporate governance matters.

Shown below is a selection of Mark’s engagements.

  • Representation of hospitality company in connection with its initial public offering and listing on NYSE, as well as ongoing counseling with respect to compliance with securities laws and NYSE rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed public company in the banking industry in connection with strategic transactions, capital raising transactions, compliance with securities laws and NYSE rules, disclosure and corporate governance matters, including strategic acquisitions, notes offering and at-the-market offering.
  • Representation of clean tech manufacturer for industrial equipment in connection with alternative public offering and listing on NASDAQ, as well as ongoing counseling with respect to compliance with securities laws and NASDAQ rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed issuer in connection with selling stockholder block trades.
  • Representation of NYSE-listed industrial manufacturer with respect to compliance with securities laws and NYSE rules, disclosure and corporate governance matters.
  • Representation of NASDAQ-listed medical device company with respect to compliance with securities laws and NASDAQ rules, disclosure and corporate governance matters.
312-902-5612
Timothy R. Knudsen, Katten Muchin Rosenman, general corporate attorney, public interest lawyer, mergers acquisitions legal counsel
Associate

Timothy R. Knudsen is an associate in the Corporate practice with an emphasis on private equity investments, mergers and acquisitions, and general corporate counseling and representation across a wide variety of industries.

Prior to joining Katten, Tim served as a law clerk to Senator Richard Joseph "Dick" Durbin for the US Senate Judiciary Committee. While in law school, Tim was the admissions editor for the Illinois Law Review. He also served as student body vice president and as chair of the Community and Governmental Affairs...

312-902-5271