The Public Firm Accounting Oversight Board adopted a set of amendments Tuesday to its auditing requirements to strengthen the foundations that apply to audits involving a number of audit companies with new necessities for a lead auditor’s use of different auditors.
The amendments, which got here after three solicitations from the PCAOB for outdoor feedback, purpose to enhance the standard of audits during which different accounting companies or particular person accountants carry out important work on the audit for a similar firm. They may require companies to be extra cautious about who they rent and to ensure they’re following the suitable audit procedures.
“At the moment, after an in depth course of of study and public enter relating to the lead auditor’s use of different auditors, the board is taking motion to enhance audit high quality and strengthen investor safety,” mentioned PCAOB Chair Erica Y. Williams in a press release. “These amendments would require audit companies to make sure that lead auditors sufficiently plan, supervise and consider the work of different auditors.”
Working with auditors at a distinct agency generally is a far totally different expertise from collaborating with individuals employed by the identical agency. The varied challenges in coordination and communication may end up in misunderstandings in regards to the nature, timing and extent of the opposite auditors’ work and reduce the standard of the audit. To handle such issues, the amendments embody adjustments to among the PCAOB’s present requirements and undertake a brand new customary. They spell out particular procedures for the lead auditor to carry out when planning and supervising an audit that includes the work of different auditors. In addition they apply a risk-based supervisory strategy to the lead auditor’s oversight of different auditors for whose work the lead auditor is taking accountability.
The amendments will apply to all audits performed beneath PCAOB requirements, however will likely be topic to approval by the Securities and Change Fee. As soon as they’re authorised by the SEC, the amendments are anticipated to take impact for audits of economic statements for fiscal years ending on or after Dec. 15, 2024.
The PCAOB has been engaged on the usual since not less than 2016. For extra details about the venture, click on right here.