The PCAOB is revising its proposal that spells out requirements for a lead auditor to supervise other auditors, and voted Tuesday to seek additional comments on the proposal.
The board is seeking to strengthen existing requirements and create a more uniform approach to a lead auditor's use of other auditors from other audit firms. If approved, the proposal would describe a lead auditor's responsibilities for planning, supervising, and evaluating the work of other auditors.
Following the initial proposal, the PCAOB received comments seeking clarifications to some provisions and changes to others. For example, the PCAOB is proposing certain clarifications and refinements to the requirements for providing instructions to—and reviewing the work of—other auditors.
In the supplemental request for comment issued Tuesday, the board asked for additional comments on the revisions to the proposal.
"We take public comments very seriously in the standard-setting process," Martin Baumann, the PCAOB's chief auditor and director of professional standards said in a news release. "The clarifying changes and other revisions being proposed by the board today would further improve the requirements for audits involving multiple firms."
In an increasingly global and complex environment, the PCAOB has found that the prevalence of audits involving other audit firms has increased. The proposal is designed to increase the lead auditor's involvement in and evaluation of the work of other auditors. It would impose a uniform approach to the use of other auditors by:
- Directing the lead auditor's supervisory responsibilities to the areas of greatest risk, consistent with PCAOB risk assessment standards.
- Making clear that to act as lead auditor, an audit firm must itself audit a meaningful portion of the financial statements.
- Requiring more explicit procedures to prompt the lead auditor to bolster its involvement in the work of other auditors, including enhanced communication and more robust evaluation of other auditors' qualifications and work.
Comments can be submitted by Nov. 15 through the PCAOB's webpage.
—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is a JofA editorial director.
