PCAOB has new plan for naming audit engagement partners

By Ken Tysiac

The PCAOB plans to propose a new plan for identifying the engagement partner for public company audits in the United States, the board’s chairman, James Doty, said Monday.

By the end of this month, Doty said during a speech at a conference in Belgium, the PCAOB expects to seek public comment on a new form the board has developed that an auditor could file with the PCAOB identifying himself or herself as the engagement partner for a particular audit.

Identification of the engagement partner has been a hotly debated issue in the United States for many years. In 2009, the PCAOB issued a concept release to explore the possibility of requiring an engagement partner to sign audit reports, which has not been customary in the United States.

Questions about the relevance of naming the engagement partner—as well as potential personal liability for auditors—led the PCAOB to abandon the idea of signatures. Instead, the PCAOB proposed in 2011 and 2013 that engagement partners be named in audit reports, rather than signing them. The PCAOB also proposed naming other firms that substantially contribute to the audit.

But the same questions about relevance and liability remained. The PCAOB’s response to those concerns is the new idea of filing a separate form with the PCAOB to name the engagement partner.

“I believe there is a middle ground that will provide investors this disclosure in a form that reduces auditors’ perception of litigation risk,” Doty said during the speech.

The PCAOB also plans to open a new public dialogue on potential indicators of audit quality, Doty said.

Ken Tysiac ( ktysiac@aicpa.org ) is a JofA editorial director.

Where to find December’s flipbook issue

The Journal of Accountancy is now completely digital. 

 

 

 

SPONSORED REPORT

Get Clients Ready for Tax Season

This comprehensive report looks at the changes to the child tax credit, earned income tax credit, and child and dependent care credit caused by the expiration of provisions in the American Rescue Plan Act; the ability e-file more returns in the Form 1040 series; automobile mileage deductions; the alternative minimum tax; gift tax exemptions; strategies for accelerating or postponing income and deductions; and retirement and estate planning.