SEC Wants Feedback on PCAOB Rules for Disclosing Audit Participants
The Securities and Exchange Commission (“SEC”) has issued a Notice of Filing of Proposed Rules on Improving the Transparency of Audits: Rules to Require Disclosure of Certain Audit Participants on a New PCAOB Form and Related Amendments to Auditing Standards for public comment. Issuance of the notice is for receiving feedback on the Public Company Accounting Oversight Board’s (“PCAOB”) new rules to give investors more information regarding the participants of audits.
The PCAOB’s new rules and amendments to auditing standards call for audit firms to identify the audit engagement partner and other audit firms involved in each audit. Under the new rules, auditors must file a new PCAOB Form AP, Auditor Reporting of Certain Audit Participants, for every issuer audit and to identify:
- The engagement partner;
- The names, locations, and participation of other accounting firms involved in the audit if their work was at least 5 percent of the complete audit hours; and
- The participation of all other accounting firms involved in the audit whose singular participation was less than 5 percent of the complete audit hours.
If approved, the engagement partner disclosure requirement will go into effect for auditor’s reports issued on or after January 31, 2017, or three months following the final rules’ approval, whichever is later. Disclosures of other audit firms involved in the audit will go into effect for auditor’s reports issued on or after June 30, 2017.