The PCAOB is seeking input from audit firms, preparers, audit committees, investors, and other financial statement users to inform the board’s interim analysis of its new requirement to include critical audit matters in audit reports.
Issued in 2017, PCAOB Auditing Standard No. 3101, The Auditor’s Report on an Audit of Financial
Statements When the Auditor Expresses an Unqualified Opinion, requires the auditor to communicate critical audit matters. These are matters arising from the audit of the financial statements that are communicated or required to be communicated to the audit committee that:
- Relate to accounts or disclosures that are material to the financial statements; and
- Involved especially challenging, subjective, or complex auditor judgments.
The requirement provided a new mechanism for auditors to communicate with the users of auditors’ reports. The requirement took effect for audits of large accelerated filers with fiscal years ending on or after June 30, 2019. For all other companies to which the requirements apply, the effective date is for audits of fiscal years ending on or after Dec. 15, 2020.
In a request for comment issued Friday, the PCAOB seeks information needed to complete its interim analysis before the second phase of implementation begins. In recognition of the challenges commenters are facing related to the coronavirus pandemic, the board extended the comment period from 30 to 60 days.
—Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.