The Public Firm Accounting Oversight Board launched its 2021 annual report on Thursday, highlighting its foremost accomplishments because it transitioned to a principally new board.
Final 12 months, the Securities and Change Fee ousted former chair William Duhnke and two different board members, and named 4 new board members (one had already departed on his personal): chair Erica Williams and board members Kristina Ho, Kara Stein and Anthony Thompson. Duane DesParte, who was performing chair throughout the transition from Duhnke to Williams, is the one remaining board member from a 12 months in the past.
Williams, who was sworn on this January, described the board’s accomplishments in an introduction to the report. “In 2021, the PCAOB confronted modifications and transition, together with the persevering with challenges of the COVID-19 pandemic, high-profile developments within the capital markets, and ongoing technological evolution in auditing,” she wrote. “The management of our group additionally modified with the appointment of 4 new board members in November. Amid these shifts, our group stayed targeted on acting at a excessive degree.”
Regardless of the pandemic, the PCAOB inspected 191 auditing companies, together with 12 U.S. companies with greater than 100 issuer audit purchasers, 81 U.S. companies with 100 or fewer issuer purchasers, 50 U.S. companies that audit broker-dealers, and 48 non-U.S. companies in over 26 jurisdictions. The board continues to be negotiating with Chinese language authorities to achieve the flexibility to examine its audit companies (see story).
The PCAOB has come below stress to step up its enforcement efforts, which is one purpose why the outdated board was pressured out by the SEC. Final 12 months, the PCAOB issued 21 settled disciplinary orders, sanctioned 15 people and 14 audit companies, and issued 14 orders involving U.S. auditors and 7 orders involving non-U.S. auditors. That complete included 5 orders involving the six largest world accounting agency networks, and 16 orders involving smaller accounting companies.
Final 12 months, the board up to date a number of of its guidelines, particularly with rulemaking pertaining to the Holding Foriegn Firms Accounting Act, the 2020 regulation handed by Congress that threatens to delist firms whose auditors don’t permit PCAOB inspections for 3 years in a row, primarily aimed toward Chinese language auditing companies. The PCAOB employees additionally labored to develop a proposed normal on high quality management for the board to contemplate and continued to observe different areas so as to add to the standard-setting agenda.
One other standard-setting initiative that made headway in 2021 was a venture on the lead auditors’ use of different auditors. The PCAOB issued a proposal to strengthen the present necessities and impose a extra uniform strategy to a lead auditor’s supervision of different auditors. Final September, the PCAOB issued a supplemental request for remark asking for additional public enter on revisions to the proposal, with hopes of adopting ultimate amendments and finishing the standard-setting venture this 12 months.
“Guaranteeing our requirements stay related and match to be used is important to our investor-protection mission,” Williams wrote. “Our aim is to set high-quality requirements knowledgeable by our oversight actions, our understanding of the audit and monetary reporting surroundings, and public enter.”
Searching for remark
Individually, on Tuesday, the PCAOB issued a request for touch upon the preliminary influence of the brand new necessities for auditing accounting estimates and utilizing the work of specialists. The request is a part of the PCAOB’s interim evaluation of the latest necessities. The PCAOB plans to judge the feedback it receives, together with different proof it will get from the evaluation, and weigh whether or not further steerage or different steps could also be applicable.
“The PCAOB is dedicated to performing sturdy financial analyses of the general impact of recent auditing necessities, together with performing post-implementation critiques,” stated Williams in an announcement. “We welcome enter from buyers, audit committees, preparers, lecturers, audit companies, and others who use monetary statements.”
Feedback may be emailed to feedback@pcaobus.org or mailed to the Workplace of the Secretary, PCAOB, 1666 Okay Road, NW, Washington, DC 20006-2803. All feedback ought to seek advice from Interim Evaluation No. 2022-001, “Estimates and Specialists Audit Necessities,” on the topic or reference line and must be submitted no later than June 10, 2022. The feedback will probably be posted to the PCAOB web site.
The PCAOB is encouraging commenters to supply knowledge, proof, and particular examples to help their feedback in response to the request. Extra details about the PCAOB’s post-implementation evaluate program can be accessible on the PCAOB web site.