PCAOB reproposes auditor reporting standard
FINANCIAL REPORTING INSIGHTS |
The Public Company Accounting Oversight Board (PCAOB) recently decided to repropose for public comment its auditor reporting standard, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, and Related Amendments to PCAOB Standards. If finalized, the standard would require auditors to provide additional information in their reports on audits of financial statements, including information about critical audit matters and auditor tenure.
The reproposal reflects the following revisions, among others, from the auditor reporting standard proposed in 2013:
- Narrowing the definition of a critical audit matter to only those matters that involved especially challenging, subjective or complex auditor judgment
- Limiting the source of potential critical audit matters to matters communicated or required to be communicated to the audit committee
- Adding a materiality component to the definition of a critical audit matter
- Expanding the communication requirement to require the auditor to describe how the critical audit matter was addressed in the audit
- Excluding from the requirements regarding critical audit matters audits of brokers and dealers reporting under the Securities Exchange Act of 1934 Rule 17a-5; investment companies other than business development companies; and employee stock purchase, savings and similar plans
- Removing the provision of a new auditing standard regarding the auditor’s responsibilities for other information outside the financial statements
The reproposal is available for comment until August 15, 2016.