Accounting & Auditing Update

Apparently doubting the quality of the audit, investors punish companies when they first learn that others from outside the principal audit firm had a hand in assuring the company’s financial statements.

When the SEC issues its audit committee discussion paper, it likely will explore more on the audit firm’s tenure and naming engagement partners. As the PCAOB has tried to get consensus on these themes, the board has heard pushback that the disclosure is better placed in audit committee reports, the SEC’s jurisdiction. “That’s why we’re likely to see that at least floated in the SEC idea document,” says Joe Carcello, a member of the SEC’s advisory committee. More inside.

Audit regulators are trying again to propose a rule that would give investors more information about who is working behind the curtain when an audit firm files its final report on a company’s financial statements.

The SEC is gathering comment on recent PCAOB rules that require audit firms to complete a new filing providing the name of engagement partners on public company audit engagements. PCAOB rules are subject to SEC approval before they can become final, which is why the Commission wants to hear remarks for itself. The new filing requirement is meant to take effect for audit reports issued on or after Jan. 31, 2017, giving audit firms 35 days after the first filing of each audit report to complete the PCAOB filing.

The SEC has given final approval to a PCAOB rule requiring audit firms to complete a new filing on Form AP to provide the name of the engagement partner on each audit engagement. Meanwhile, Tammy Whitehouse reports, the PCAOB is attempting once again to expand the audit report.

More than a decade after regulators began mulling how to give some transparency to investors around who actually performs public company audits, PCAOB Chairman James Doty said he is hopeful that the board is on track to “get this done by the end of the year.” Doty recently said the PCAOB received 45 comment letters on its proposal to require auditors to name engagement partners. Details inside.

The accounting profession is objecting to proposed changes to employee benefit plan reporting, especially requiring plan sponsors to name the engagement partner on plan audits. Tammy Whitehouse has more.

The accounting profession is objecting to proposed changes to employee benefit plan reporting, especially requiring the name of the engagement partner on plan audits. More from Tammy Whitehouse.

The earliest Form AP filings by audit firms are providing a first glimpse into who is overseeing and signing off on audit reports for public companies. Tammy Whitehouse has more.

Audit committees now have some talking points on how to engage auditors and management on the audit profession's new Form AP filing requirement.

Here’s a call to attention for audit committees. Audit regulators are rolling out a powerful new gift that will help you assess the quality of your external audit.

New academic research suggests audit firms may be shielding low-performing partners from client scrutiny by remaining coy about PCAOB inspection results.

Recently published academic research suggests there is indeed a detriment to audit quality when audit firms hold long tenures on audit engagements.

Investors react when they know the name of an engagement partner on an audit, research suggests, but the reaction may be stronger than expected.

The PCAOB has issued more guidance to auditors about how they should comply with requirements to add new information to audit reports.

As audit firms disclose who performs public company audits, gender diversity is emerging as the first major concern regarding audit engagement leadership.