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PCAOB Proposal Would Bring Greater Transparency to Public Company Audits

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Posted by AccountingWEB in Accounting & Auditing on 10/13/2011 - 14:39

By AccountingWEB Staff

On October 11, 2011, the Public Company Accounting Oversight Board (PCAOB) voted to issue for public comment proposed amendments to its standards that would bring greater transparency to public company audits.

The proposal would require registered accounting firms to disclose the name of the engagement partner in the audit report and on the PCAOB Annual Report form. It would also require disclosure in the audit report of other accounting firms and other persons not employed by the auditor that took part in the audit.

"This proposal would increase transparency of public company audits by providing investors with information about certain key participants in the audit," said James R. Doty, PCAOB Chairman. "This would bring disclosures about U.S. audit engagement partners more in line with those provided for many engagement partners abroad."

There is no requirement in the proposal that the audit engagement partner sign his or her name to the audit report. Instead, the proposal would require that the engagement partner's name be disclosed in the audit report. This would make the engagement partner's name readily available to the users of the audit report while mitigating concerns about minimizing the firm's role in the audit.

The proposal also would amend PCAOB Form 2, Annual Report Form, to require firms to disclose the engagement partner's name for each audit report listed on the form. The form provides basic information about the firm and the firm's issuer-related practice over the most recent twelve-month period.

"We have carefully studied the issue of enhancing the transparency of public company audits and discussed it with the Board's Standing Advisory Group and Investor Advisory Group. Now we look forward to receiving public comment on this proposal," said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards.

Comments on the proposed amendments are due January 9, 2012. Comments can be submitted by e-mail to comments@pcaob.org or postal mail:

Public Company Accounting Oversight Board

Attention: Office of the Secretary

1666 K Street NW

Washington, DC 20006-2803

Please note Docket number 029 in your comment.

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Gail Perry, CPA
Editor-in-Chief, AccountingWEB
editor@accountingweb.com


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