The
PCAOB on July 28 passed an auditing standard, Engagement Quality
Review (EQR), requiring an independent reviewer to perform EQRs
and superseding the existing concurring partner review requirement. If
approved by the SEC, the standard will take effect for EQRs of audits
and interim reviews for fiscal years that begin on or after Dec. 15,
2009. The standard was first proposed in February 2008 and revised
this March.
Among other things, the standard requires that a reviewer be a partner in the firm that issues the engagement report, someone in an equivalent position in thefirm or someone from outside the firm who is associated with a registered public accounting firm. Audit engagement partners are prohibited from serving as the reviewer on that engagement for at least a two-year “cooling-off period.”
More information is available on the PCAOB’s Web site at pcaob.org. A webcast of the PCAOB meeting is available at connectlive.com/events/pcaob.
The PCAOB voted on July 28 to seek public comments on a Concept
Release to consider the effects of a potential requirement for the
engagement partner to sign the audit report in addition to the
existing requirement for the audit firm to sign its name on the
audit report.
Board members cited comments they received that such a move would increase an individual’s sense of responsibility and said that many members of its Standing Advisory Group with backgrounds as investors support it. They also expressed concerns about acting with haste and agreed that issuing a concept release and carefully evaluating comments was the wise move.
The comment period closed Sept. 11. More information is available on the PCAOB’s Web site at pcaob.org.
