PCAOB Release Regarding Audit Disclosures
Public company Accounting Oversight Board (PCAOB) took an initiative again by releasing a reproposal regarding audit disclosures. This step is taken to improve the transparency of audits on 4th of December 2014.
2005: PCAOB is requiring advice from its Standing Advisory Group (SAG) at several times to whether amendments should be made on requiring the engagement partner’s signature on the auditor’s report and disclosure of the name of the engagement partner.
July 2009: A concept release was issued by PCAOB that required the signatures of own name of the engagement partners on the audit report.
October 2011: PCAOB required the disclosure of the name of the engagement partner. The signature was not required. Moreover the disclosure of the other participants’ involvement in the audit was also required.
These days the names of related firms and persons that participated in the audit are undisclosed to the user of the information. The name of the firm issuing auditor’s report is only disclosed.
PCAOB’s chairman Mr. James R. Doty stated the effectiveness of the report of the auditors will be increased by presenting additional disclosures about the “partner to the engagement” and extra information regarding other participants. This will help the investors in taking their decisions.
In light of the Chairman’s words the two necessary requirements are:
1. Name of the engagement partner for the audit of the most recent period.
2. Disclosure about the:
2. A. “Other independent public accounting firms” participated in the audit.
2. B. “Other persons not employed by the auditor” but participated in the audit. The term “other persons” implies to individuals as well as companies.
The disclosure should contain their names, locations, and extent of participation. The extent of participation is measured in terms of a percentage of the total audit hours.
Objective of PCAOB objective for audit disclosures:
Mr. Baumann the Chief Auditor and Director of Professional Standards of PCAOB, further explained:
Moreover the “location of jurisdiction” will also be useful information for the investor as may that location is out of PCAOB’s inspection.
Comments on the reproposal of amendments are due by February 3, 2014.
- AIM-listed Mining Company GoldStone Switches Auditor
- New Study Reveals 55% of Public Believe Auditors’ could Prevent Company failures’
- FRC Hands KPMG a £5m Fine over Co-Operative Bank’s Audit Failings
- IAASB Consults on Simplifying Auditing Standards for Small Entities with Less Complexities
- Anglo American Replaces Deloitte with PwC as its External Auditor
- SEC uncovers $20m Accounting Fraud at Celadon Group
- Deloitte Resigned as Ferrexpo Auditor over Concerns Regarding Misappropriation of Charity Funds