PCAOB proposes biggest shake-up to US audit reports since 1940s

PCAOB proposes biggest shake-up to US audit reports since 1940s

America's accountancy watchdog wants auditors to reveal more information about the listed companies they audit

US AUDITORS have been told to reveal more information about the listed companies whose books they vet, under sweeping proposals unveiled by America’s accountancy watchdog.

The PCAOB, set up ten years ago in the wake of the Enron scandal, earlier this week proposed a new auditor reporting standard that, if implemented, will represent the biggest shake-up to US audit reports since the 1940s.

Three years in the making, the new rules will require auditors to provide much more information in the audit report that accompanies a company’s annual report.

“These proposed changes will make the auditor’s report more relevant to investors,” said James Doty, chairman of the PCAOB [pictured]. “More robust audit reports that demonstrate the strength and value of the audit also should lead to better public awareness of, and appreciation for, auditors’ skill and insight.”

The proposed standard would retain the pass/fail model in the existing auditor’s report, but would provide additional information to investors and other financial statement users about the audit and the auditor.

Under the proposals, auditors would be required to disclose “critical audit matters”; information related to auditor independence, auditor tenure, and the auditor’s responsibilities for the evaluation of other information outside the financial statements; and enhancements to existing language in the auditor’s report related to the auditor’s responsibilities for fraud and notes to the financial statements.

“The goal of these proposed standards and amendments is to significantly improve the current auditor reporting model by requiring the auditor to communicate specific information about each audit based on audit procedures performed,” said Martin Baumann, PCAOB chief auditor and director of professional standards.

Comments on the proposed standards and related amendments are due by 11 December.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource