to auditing standards require audit firms to disclose the names of each
audit engagement partner as well as the names of other audit firms that
participated in each audit.Washington, Dec. 15, 2015
The Public Company Accounting Oversight Board today adopted new rules to provide investors with more information about who is participating in public company audits.
The new rules and accompanying amendments
to auditing standards require audit firms to disclose the names of each
audit engagement partner as well as the names of other audit firms that
participated in each audit.
Under the final rules, auditors will be required to file a new PCAOB Form AP, Auditor Reporting of Certain Audit Participants, for each issuer audit, disclosing:
"Auditing is a business about reputation," said James R. Doty, PCAOB Chairman. "Transparency about the partner and firms involved should further incentivize auditors to organize audit teams conscientiously to give investors comfort that it is reliable."
"Form AP will provide investors and other financial statement users with the information they have continued to request — the name of the engagement partner and information about other accounting firms participating in the audit — in a single searchable database, giving the market valuable information, while responding to concerns raised by accounting firms and others about the unintended consequences of such a disclosure in the auditor's report," said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards.
The standard filing deadline for Form AP will be 35 days after the date the auditor's report is first included in a document filed with the Securities and Exchange Commission. In the case of initial public offerings, the Form AP filing deadline will be 10 days after the auditor's report is first included in a document filed with the SEC.
The new rules are subject to approval by the SEC.
If approved by the SEC, the disclosure requirement for the engagement partner will be effective for auditor's reports issued on or after January 31, 2017, or three months after SEC approval of the final rules, whichever is later. For disclosure of other audit firms participating in the audit, the requirement will be effective for reports issued on or after June 30, 2017.
The PCAOB, acting on a recommendation of the Department of Treasury's Advisory Committee on the Auditing Profession, began an analysis of this transparency issue in 2009 when it issued a Concept Release.
Auditor transparency has been the subject of four rounds of public comment, and has also been discussed at several PCAOB Standing Advisory Group and Investor Advisory Group meetings. Further background and relevant documents on the initiative can be found on the PCAOB website on Docket 029.
PCAOB staff plans to publish guidance in 2016 for firms relating to compliance with the reporting requirements of Form AP.
A fact sheet on Form AP also is available.