There’s not much to see just yet, but audit regulators have launched a web page that will be the new means by which anyone in the capital markets can throw open the curtain and see who’s pulling the levers on individual audit engagements.

The Public Company Accounting Oversight Board has put the portal in place that will be home to the new Form AP filings by audit firms to identify engagement partners and other outside contributors on each public company audit engagement. After years of proposals and pushback, the PCAOB adopted the Form AP filing requirement in December 2015 for all registered firms that audit public company financial statements. Audit firms are required to begin filing Form AP in early 2017.

In addition to launching the public portal, where anyone with an interest will be able to search and sort Form AP filings, the PCAOB also issued guidance to audit firms to assist them in preparing the Form AP filings. "Form AP will provide transparency to investors about the engagement partner and other accounting firms that took part in the audit," said Martin Baumann, chief auditor and director of professional standards at the PCAOB, in a statement. "The guidance issued today will help firms implement the processes required to deliver that information."

Identifying engagement partners has been a sore spot for the auditing profession for years. Sarbanes-Oxley requires CFOs and CEOs to certify financial statements with their personal signature. PCAOB Chairman James Doty and other board members initially championed the idea that audit engagement partners should do the same with audit reports.

The board met heavy resistance from the profession. Audit firms and legal counsel argued signatures on an audit report, even names appearing in the audit report, would expose auditors to additional professional liability. Even from within, two of the PCAOB’s five members resisted the idea, asserting there’s no evidence linking partner names with better audit work.

With the memory of Arthur Anderson’s collapse still fresh and regulators still concerned over the concentration of audit work in a handful of firms, the proposal shifted to a separate filing requirement. The board created Form AP, Auditor Reporting of Certain Audit Participants, to collect the information in another way.

While investor advocates lost the fight to have partners identified in audit reports, they gained a filing that will now be assembled into a searchable database, a bonus they wouldn’t have gotten with a signature requirement. “The fact that the new disclosures will be consolidated in a database available on the PCAOB website means investors, analysts, audit committees and others can conduct meaningful comparisons,” said Doty when the board adopted the new rules.

In addition to identifying engagement partners, audit firms will be required to identify in Form AP filings any firms or individuals outside the principal audit firm that contributed to the audit. A 2007 academic study revealed audit firms were quietly offshoring a great deal of low-level, repetitive audit tasks to offshore firms.

Audit firms also rely on overseas affiliates to conduct audit work at subsidiaries or divisions of multinational companies in those home countries. Sometimes that work is performed in jurisdictions where the PCAOB is prohibited from conducting its regulatory inspections. The new Form AP filing is designed to provide some transparency around who is performing the audit work.

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