PCAOB Amendments to Rule 4003 Receive SEC Approval
Amendments to Public Company Accounting Oversight Board (“PCAOB”) Rule 4003, Frequency of Inspections, have been approved by the Securities and Exchange Commission (“SEC”). Effective immediately, the amendments address how often the audit regulator performs inspections of various groups of registered public accounting firms. The amendments also:
- Remove the triennial inspection requirement for “substantial role only” firms, and replace it with a requirement to inspect at minimum five percent of such firms annually;
- Preserve the requirement to inspect firms that issue audit reports for an issuer but give the PCAOB permission to decline an inspection for any firm that does not then issue an audit report for two successive years;
- Qualify the term “audit report” to retain applicable portions of the rule with respect to its original meaning; and
- Affirm that no inspection requirement occurs solely due to a firm agreeing to an issuer’s use of a previously distributed audit report.