PCAOB Enhances Transparency of Inspection Reports
The Public Company Accounting Oversight Board (PCAOB) recently announced it has enhanced its inspection reports with a new section on auditor independence and a range of other improvements intended to increase transparency.
The changes will appear in reports for PCAOB inspections completed in 2022, beginning with eight reports released May 2, 2023.
The enhanced inspection reports will include:
- 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 U.S. Securities and Exchange Commission independence rules.
- The expansion of 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.
- 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.
- For annually inspected firms, charts to clearly show firm and engagement partner tenure.
For more information, see the PCAOB’s inspections page.