The PCAOB released a 26-page report describing how its inspections of audit firms work and how audit committees can gather information from audit firms about those inspections. The release is available at tinyurl.com/cdlytcp.
Part I of the PCAOB audit inspection report is public and describes audit deficiencies where the inspection staff found that the auditor failed to gather enough evidence to support an audit opinion. The PCAOB identified questions that audit committees may want to ask their audit firms about PCAOB inspections. These questions include:
- Was the company’s audit selected for PCAOB inspection?
- Did the PCAOB identify deficiencies in other audits that involved auditing or accounting issues similar to issues presented in the company’s audit?
- What were the firm’s responses to the PCAOB findings?
Regarding Part II audit inspection findings, which are not public, the PCAOB suggests that audit committees ask for generic information such as:
- What changes is the firm making to address quality-control deficiencies?
- What is the progress of the quality-control remediation process, and what submissions has the firm made to the PCAOB as part of that process?
- For what years has the PCAOB made a final determination about the firm’s remediation efforts, and what was the nature of that determination?
- Has the PCAOB provided initial indications that the audit firm may not have sufficiently remediated any items?
The PCAOB entered a cooperative arrangement with the Accounting and Auditing Institute of Spain.
The partnership will allow joint inspections in the oversight of audit firms subject to the jurisdictions of both regulators. Joint inspections begin this year, as the agreement takes effect immediately.
The PCAOB previously established cooperative arrangements with regulators in three other European Union member states—the United Kingdom, the Netherlands, and Germany—in addition to Switzerland and Norway. Several regulators in North America, the Middle East, Asia, and Australia also cooperate with the PCAOB.