Audit Committees Get Advice from PCAOB on Matters Related to Inspections
PCAOB has recently provided a release in their bid to offer information to auditing committees regarding its inspection procedures and the manner in which they could use the reports related to inspection to raise issues and questions before their audit firms.
The primary aim behind issuing the release is to equip the public entity boards of directors ‘auditing committees better so that they indulge in useful discussions with the audit companies of their firm on matters related to inspection results.
PCAOB’ release also offers information regarding the significance and meaning of the findings of their inspection with regard to both reviews on engagement and quality controlling. The release also provides certain specified approaches, which can be considered by an auditing committee when it comes to starting or improving its discussions with an audit entity in terms of inspection.
James Doty, PCAOB Chairman mentioned that at times auditors mischaracterize the findings of the inspections carried out by PCAOB, which further gives the members of the auditing committee an impression that the inadequacies in the inspection reports simply revolve around differences that arise due to the manner in which professionals judge different aspects of the findings. Several auditors do not show interest in discussing the non-public parts of the findings of the inspection.
PCAOB’ release points out many areas, which the auditing committees may want to discuss and resolve with assistance from their auditors and further also inquire about reports on inspection. For example, they would like to discuss, if the audit process performed before the auditing committee was chosen by PCAOB for the purpose of inspection and whether any type of findings was ever made. They would also want to find out more about the company’s response to the findings of the inspector of PCAOB and the remedial measures taken by the company with regard to the deficiencies in quality controlling found out by PCAOB.
In addition to the release, PCAOB has also given a separate document on an auditing norm that has been proposed. The norm is based on communicating with auditing committees. This document has been designed for PCAOB’s registered audit firm’s auditors.