The PCAOB has enhanced its inspection reports with a new section on auditor independence and other changes that are designed to "increase transparency by making publicly available more information that is relevant, reliable, and useful for investors and other stakeholders."
The changes will appear in reports for PCAOB inspections completed in 2022, starting with eight reports, according to a news release.
"We are committed to making our inspection reports as valuable as possible for investors, audit committees, and others …," PCAOB Chair Erica Williams said in the news release. "These enhancements will provide relevant information that investors have asked for and support improvements in overall audit quality."
The enhanced inspection reports will include:
- A new section of the report focused on independence violations: Reports will feature a new independence section (Part I.C) that will discuss instances of noncompliance with PCAOB rules related to maintaining independence, as well as potential noncompliance with SEC independence rules.
- More information related to fraud procedures and the identification and assessment of the risks of material misstatements: Reports will expand Part I.B to include deficiencies related to AS 2401, Consideration of Fraud in a Financial Statement Audit, and AS 2110, Identifying and Assessing Risks of Material Misstatement.
- More commentary: Reports will provide additional commentary in Part I.A for certain situations, such as whether the audit was the firm's first audit of the issuer or whether the firm had identified significant risks, including fraud, for areas in which PCAOB inspection staff identified deficiencies.
- New graphs: For annually inspected firms, reports will include charts to show firm and engagement partner tenure.
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.