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SEC Financial Reporting Manual

Topic 4: Independent Accountants’ Involvement

Topic 4: Independent Accountants’ Involvement

Footnotes

1
This table describes the staff’s application of PCAOB registration requirements for an auditor whose report is included in a filing with the SEC. There are instances, not included in the table, when a principal auditor will use the work of another auditor and take responsibility for the other auditor’s work. In these instances, the other auditor’s report is not included in the filing with the SEC. The determination of whether the other auditor must be registered with the PCAOB is made by reference to the Sarbanes-Oxley Act and the PCAOB’s rules. In all such instances the principal auditor is responsible for performing the audit in accordance with PCAOB standards.
4
S-X 2-02 requires that the auditor’s report state the applicable professional standards under which the audit was conducted. Under S-X 1-02 an audit of the financial statements of an issuer means an examination by an independent accountant in accordance with the standards of the PCAOB. In the situation identified in the chart above, the view of the SEC staff is that the applicable professional standards in S-X 2-02, as applied to the other auditor’s report, relates to an issuer and, therefore, the other auditor’s report must refer to the standards of the PCAOB.
5
If a principal auditor is making reference to another auditor’s report on the financial statements of the non-issuer entity, the other auditor’s report must refer to the standards of the PCAOB. See footnote 4 above. If a principal auditor does not make reference to another auditor’s report on the financial statements of the non-issuer entity, the other auditor’s report need not refer to the standards of the PCAOB.
6
The entity is itself an issuer and so must comply with the rules applicable to issuers.