Audit firms are required to report the engagement partner’s name consistently on all Forms AP filed with the PCAOB, according to new PCAOB staff guidance issued Thursday.
Form AP is the new document that each PCAOB-registered public accounting firm must file under new PCAOB rules. On the document, firms are required to disclose the name of the engagement partner and provide information about other accounting firms that participate in the audit of a public company.
The PCAOB staff provided implementation guidance for Form AP in a document, “Staff Guidance, Form AP, Auditor Reporting of Certain Audit Participants and Related Voluntary Audit Report Disclosure Under AS, 3101, Reports on Audited Financial Statements,” which was issued Thursday.
Under the guidance, the engagement partner must report his or her name consistently on all Forms AP unless the partner has changed his or her name. The firm also will be required to disclose the Partner ID, a unique, 10-digit identifier that will be assigned by the firm to each partner who serves as an engagement partner on public company audits.
The first five digits of the identifier will be the Firm ID that the PCAOB assigns the firm. The last five digits will be assigned to engagement partners in sequential order. For example, if a firm has 200 engagement partners and its Firm ID is 98715, its Partner IDs will range from 9871500001 to 9871500200.
If an engagement partner begins performing audits for a new firm, the new firm is required to assign a new Partner ID to the individual. If the engagement partner was previously identified on Form AP by a different Partner ID, the new firm would be required to report all Partner IDs that have been associated with the engagement partner.
For example, if engagement partner Jane Smith (Partner ID number 9871500109) leaves for a new firm with Firm ID 99716, the new firm would assign her the next available number under its methodology. The new firm would report on Form AP her new Partner ID (9971601234) and the Partner ID Jane previously used (9871500199). The first firm would retire and not reassign Jane’s first Partner ID to another partner.
Meanwhile, audit firms are required to disclose the names of other accounting firms that contributed 5% or more of the total audit hours in an engagement. The firm filing Form AP is required to report the other accounting firm’s:
- Legal name.
- City and state if the firm is in the United States, or city and country if the firm is located outside the United States.
- Firm ID, when applicable.
- Percentage of total audit hours.
Form AP also requires disclosure of the total number of other accounting firms that contributed less than 5% of total audit hours, and the percentage of total audit hours that all such firms contributed.
—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.