SEC and PCAOB Issue Joint Statement on Audit Quality and Coronavirus

Representatives from the SEC and PCAOB have issued a joint statement regarding their continued dialogue with audit firm representatives on audit quality in China and other emerging markets and the effects of the coronavirus on financial reporting, including the potential need for relief.

The joint statement emphasizes “(1) the need to consider potential disclosure of subsequent events in the notes to the financial statements . . . and (2) [the SEC’s] general policy to grant appropriate relief from filing deadlines in situations where, in light of circumstances beyond the control of the issuer, filings cannot be completed on time with appropriate review and attention.” In addition, issuers are encouraged to engage directly with the SEC staff on questions regarding potential subsequent-event disclosures or the need for relief from filing deadlines. The SEC staff will continue to monitor the situation, and the joint statement indicates that “[r]elief may be made available on a case-by-case or broader basis as circumstances merit.”