The Public Company Accounting Oversight Board is looking forward and back, with back-to-back announcements of an open meeting slated for next Tuesday on potential new rulemaking, and the launch of the PCAOB’s first post-implementation review of an existing standard.
As reported by AccountingToday’s Mike Cohn in PCAOB Mulls New Requirement for Use of Other Auditors, the PCAOB announced it will convene an open board meeting on Tuesday, April 12 at 10:00 a.m. to consider proposing new requirements that would apply to audits that involve accounting firms or accountants outside the firm issuing the report. As noted in the PCAOB’s press release: “In many audits, important work is performed by accounting firms or individual accountants outside the firm issuing the audit report. This proposal would address the lead auditor’s responsibilities with respect to those other auditors that participate in the audit.
Separately, Ken Tysiac of The Journal of Accountancy reported on the PCAOB’s recent announcement that they have launched their first post-implementation review of an existing audit standard, by starting with Auditing Standard No. 7 (AS7), Engagement Quality Review. As noted in Tysiac’s article, Post Implementation Analysis Begins with Engagement Quality Review Standard, the PCAOB is seeking comment by July 5 on these issues in connection with AS7:
– Whether it has accomplished its purpose and increased the likelihood that engagement deficiencies will be detected before the audit report is issued.
– Whether reviews under the standard provide a meaningful check on the engagement team’s work.
– Whether users of financial statements believe that the implementation of AS7 has affected the credibility of financial reporting.
– The experiences of auditors, preparers, and audit committees with implementation of AS7.
– The initial and recurring costs and benefits associated with the implementation of AS7.
– Whether AS7 could be refined or improved to better accomplish its purpose.
PCAOB Request for Comment: Post-implementation review of Auditing Standard No. 7, Engagement Quality Review
In other PCAOB-related news, the Board recently announced their summary inspection findings of audit firms’ compliance with Auditing Standard No. 16 (AS16), Communication with Audit Committees. As noted in the PCAOB’s press release, only 7% of audits inspected in 2014 showed failures to comply with AS16, and similar results were evident in preliminary inspection findings for 2015. Read more in our earlier post: PCAOB Praises Communication with Audit Committes; What’s Being Discussed?.