Audit Transparency Proposal to be Re-examined by PCAOB
The Public Company Accounting Oversight Board (PCAOB) is expected to re-examine the proposal that requires disclosure of names of the audit engagement partner in the audit report. The PCAOB may also require to disclose names of other persons of firms not employed by the auditor but who took part in the audit. The effort is intended to bring more transparency in the audits of public companies.
Director of the PCAOB Office of Public Affairs said that "the transparency proposal is a priority of Chairman James Doty". According to the agenda of PACOB, this proposal is scheduled for re-proposal or adoption before the end of this year.
The audit transparency proposal was issued by the PCAOB in October of 2011 for feedback and comments from the public. The proposal required the public registered firms to disclose the name of the engagement partner in the audit report. Although the name need to be disclosed, the partner is not required to sign his/her name on the audit report. The purpose of the proposal is to make the name of engagement partner readily available.
If during the audit, services of other firms or other persons were used for the purpose of audit but those firms or persons were not employed by the audit firm, the proposal requires the name of such firms or persons to be disclosed in the audit report. This would help the stakeholders and users of financial statements to evaluate these persons or firms in the same way they would evaluate the auditor. This would help the stakeholders and users of financial statements to verify if the participant firm or person has any disciplinary history with PCAOB or any other regulatory authority.
The comments on the proposal were collected till January 9, 2012. After that the comments and feedback were analyzed and revisions to the draft were incorporated according to the board's considerations.