The Board also to host a public roundtable in the fall to discuss AQI project
Washington, DC, June 30, 2015
The Public Company Accounting Oversight Board today issued a concept release seeking comment on the content and possible uses of audit quality indicators, measures that may provide new insights into audit quality.
Taken together with qualitative context, AQIs may inform and enhance discussions among those concerned with the financial reporting process, such as audit committees, audit firms, investors, and regulators. Enhanced discussions could improve audits and stimulate competition among audit firms based on the quality of work.
"The AQI concept release should stimulate discussion about the drivers of audit quality," said PCAOB Chairman James R. Doty. "Currently, major parts of the audit service are less than fully transparent and improving the transparency of auditing is at the heart of several projects currently on the Board's agenda."
The concept release seeks comment on 28 potential AQIs, covering three broad categories:
"Evaluating AQIs requires context; they are not scorecards or benchmarks for grading audits," said Gregory Jonas, Director of the Office of Research and Analysis. "Rather than answering questions, AQIs are more likely to empower stakeholders to ask insightful questions of auditors, and thereby encourage auditors to do their best work."
In addition to seeking comments on the content of AQIs, the PCAOB is asking for views on how AQIs may best be used to promote audit quality.
Today's concept release explores potential uses of AQI data. It also considers how AQI data might be obtained and distributed, whether use of AQIs should be voluntary or mandatory, the scope of audits and audit firms that may be subject to AQI reporting, and the possibility of phasing-in steps toward AQI reporting and use.
"The concept release raises a wide range of important issues," Chairman Doty said. "We trust it will stimulate discussion and elicit insightful comments and suggestions that will inform the Board's work on the possible use of AQIs."
This fall, the PCAOB will convene a public roundtable to discuss views on the release and related comments. Additional details about the roundtable will be forthcoming.
Many stakeholders have encouraged the Board to explore possible use of AQIs, including the Treasury Advisory Committee on the Auditing Profession, the Board's advisory groups, audit committee members, audit firms, SEC staff, and other audit regulators. Beginning in 2013, the PCAOB named the AQI project a priority. Since then, it has held public meetings on the topic with its Standing Advisory Group and Investor Advisory Group, and has sought the views of many constituents in developing the concept release.
The Board requests comments on the concept release by September 28, 2015.
A fact sheet is also available on the AQI concept release.