US regulator sets out possible audit model changes
PCAOB lays out possible changes to auditing model and asks for stakeholder feedback
POSSIBLE CHANGES to the auditing model have been set out by US regulator the Public Company Accounting Oversight Board in its most recent concept release.
The four alternatives include auditor’s discussion and analysis, a supplemental narrative report to boost understanding of their opinion of the financial statements as a whole. Obligatory and expanded use of emphasis paragraphs is another option, in the hope of highlighting key elements of accounts. A third alternative would be auditor assurance on information outside the financial statements.
The fourth option would see auditors clarifying the standard report, explaining language and concepts such as reasonable assurance, auditor’s responsibility for fraud and management’s responsibility for information outside the financial statements.
Chairman James R Doty (pictured) said: “The concept release we issue today represents a significant step for investor protection in response to the financial crisis and a first step toward a holistic consideration of reforms designed to foster the relevance, transparency and reliability of the audit process.”
The PCAOB has called for comment on the alternatives and general feedback on the development of new auditing standards. The deadline is 30 September.