The pace of the PCAOB’s standard-setting agenda has caught the attention of SEC Chief Accountant James Schnurr.
“If you look at their agenda, there are quite a few of their projects that are directly related to audit performance standards, and they’ve been on the agenda for quite some time,” Schnurr told reporters Monday following his speech at the AICPA Conference on Current SEC and PCAOB Developments in Washington.
The time between initial consideration of a standard and its completion can take more than five years as the PCAOB considers large numbers of comment letters and other feedback. For example, the board issued a proposal on changing the auditor’s reporting model in August 2013; a reproposal is expected by the end of March 2015, according to the PCAOB’s current standard-setting agenda. The reproposal would require solicitation and consideration of additional comments; a concept release was first issued in June 2011.
A proposed standard on disclosing the engagement partner and certain other participants in audits is close to being finished; it was initiated with a concept release in July 2009.
Over the past several years, according to Schnurr, SEC chairs, commissioners, chief accountants, and others have publicly encouraged the PCAOB to accelerate the pace of its standard setting. But some of the most important projects to update auditing and quality-control standards are simply moving too slowly, Schnurr said.
He suggested that there may be an underlying problem in the PCAOB’s standard-setting process that is preventing the board from moving projects forward in a timely and effective manner. Schnurr has spoken with PCAOB Chairman James Doty about doing a “deep dive” to analyze the board’s standard-setting process. PCAOB members and staff, and SEC staff members would be involved.
Doty said during his speech at the conference that the PCAOB has been reviewing its processes, particularly in light of its goal to analyze the economic impact of potential rule-making. He said that review will be expanded.
“We should issue new rules only after thoughtful assessment of the need to improve audit quality and evaluating the economic impact of any rule-making,” Doty said. “But once we decide that any such improvement is appropriate, we want the organization, from staff to board, to be nimble in our execution.”
Schnurr said the PCAOB’s international counterpart, the International Auditing and Assurance Standards Board, seems to be developing standards in a more timely fashion than the PCAOB.
“They must be doing something that’s different than the PCAOB is, and I think if you look at the quality of the standards, they’ve addressed pretty much all of the major projects that the PCAOB has on their project list,” Schnurr said. “And the quality of their standards that they’ve issued I think is generally viewed as pretty high.”
—Ken Tysiac ( email@example.com ) is a JofA editorial director.