A key advisory group to the standard-setter for U.S. public company audits is slated to discuss the status of, and comments received on, a proposal relating to the lead auditor’s responsibility for supervision of other auditors on an engagement .
Proposal on supervision of other auditors
Having a ‘lead’ audit firm and another audit firm is not uncommon for international audit engagements as well as certain domestic audits. This is the second time the Standing Advisory Group is discussing this topic, with this week’s discussion having the benefit of commment letters received on the proposal, which was issued in April of this year.
The SAG will also receive an update from staff, and discuss the status of other standard-setting projects (see PCAOB’s 9/30/16 Standard-Setting Agenda; an updated version is anticipated to be published soon). As noted on the 9/30/16 Standard-Setting Agenda, a final standard on the Auditor’s Reporting Model is expected to be completed for a vote by the PCAOB Board by the end of this year. The focal point of the Auditor’s Reporting Model standard is a proposal for disclosure / discussion by auditors of Critical Auditing Matters- a concept analogous to the issuer’s discussion of Critical Accounting Matters.
Another topic of focus for this week’s SAG meeting will be the interaction and communication between auditors and audit committees. See the PCAOB Briefing Paper: Effective Communications Between Auditors and Audit Committees The SAG will discuss that topic following a panel discussion featuring audit committee chairs, audit partners, and a chief financial officer. Topics of discussion are expected to include:
- How audit committees stay informed about current and emerging issues;
- Whether and how auditors are providing audit quality indicators to audit committees, and how audit committees are using them;
- Audit committee use of PCAOB inspection reports; and
- Frequency and depth of auditor communications with audit committees (e.g., use of executive sessions, nature of discussions between audit committee meetings).
The PCAOB SAG meeting will take place on November 30 and December 1 and will be webcast. For further details, see the SAG meeting agenda.
PCAOB Approves 2017 Budget, 2016-2020 Strategic Plan; Both Set for SEC Review
In other PCAOB-related news, the audit overseer’s 2017 budget and 2016-2020 strategic plan were approved by the PCAOB Board on November 17. The next step is for the two documents to be considered for approval at an open commission meeting of the U.S. Securities and Exchange Commission, generally with testimony from, and Q&A with, the PCAOB Chair. The date of the upcoming SEC consideration has not yet been announced.
Additional updates on PCAOB matters will take place at the AICPA’s National Conference on Current SEC and PCAOB Developments, Dec. 5-7 in Washington, DC with simulcast available.