The Public Company Accounting Oversight Board has voted to issue a supplemental request for comment on an earlier proposal regarding the lead auditor’s use of other audit auditors.
Issuance of the supplemental request for comment re-opens the public comment period on the proposal, entitled “Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard — Dividing Responsibility for the Audit with Another Accounting Firm.”
“In today’s world, many audits, particularly for the largest companies, are multinational,” said PCAOB Chairman James Doty. “This proposal is intended to ensure the appropriate involvement of lead auditors in the work of other auditors.”
The proposal aims at increasing the lead auditor’s involvement in, and evaluation of, the work of other auditors. Additionally, the proposal would impose a uniform approach to the use of other auditors by:
- directing the lead auditor’s supervisory responsibilities to the areas of greatest risk, consistent with PCAOB risk-assessment standards;
- making clear that, to act as lead auditor, an audit firm must audit a meaningful portion of the financial statements; and,
- requiring more explicit procedures to prompt the lead auditor to bolster its involvement in the work of other auditors, including enhanced communication and more robust evaluation of other auditors’ qualifications and work.
The re-opened comment period closes on Nov. 15. For further information — including the supplemental request for comment, the original proposal, and statements made by PCAOB board members at the Sept. 26 board meeting — refer to PCAOB Rulemaking Docket 42.
Update on SEC search for PCAOB board members
In other PCAOB-related news, Securities and Exchange Commission Chairman Jay Clayton has issued an updated statement regarding the search for new members of the PCAOB. As noted in our earlier post, the PCAOB board could experience almost a complete turnover in the coming year.
“The search process is under way,” Clayton said. “I am grateful for the response to the public solicitation of potential interest that closed on Sept. 1.”
In accordance with procedures outlined in the Sarbanes-Oxley Act, which gave the authority for appointing PCAOB members to the SEC chairman, Clayton said he has consulted with and invited nominations from his fellow commissioners and intends to also seek input from Treasury Secretary Steven Mnuchin and Federal Board Chair Janet Yellen.
“My fellow commissioners and I will consider candidates for selection after the search process has been completed,” said Clayton.
Read more in Clayton’s Sept. 26 statement.