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Part of the required audit committee report, set forth in Item 407(d)(3)(i)(B), has a tortured history.  As currently written, it requires the audit committee to state whether “The audit committee has discussed with the independent auditors the matters required to be discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.”

However AS No. 61 as adopted by PCAOB Rule 3200T was subsequently replaced by  PCAOB Auditing Standard No. 16.  AS No. 16 is titled “Communications with Audit Committees.”  Although the rule changed, the SEC never updated Item 407.  Practice became to refer to AS No. 16 in the audit committee report in the proxy statement.

Now the PCAOB has reorganized its auditing standards and the reorganization was approved by the SEC.  AS No. 16 is now codified as AS No. 1301.  Item 407 has again not yet been updated.

The reorganization is not effective until December 31, 2016.  So technically you wouldn’t have to update your audit committee report this year.  However, the PCAOB says “These reorganized standards can be used and referenced by auditors before the effective date.”  So it would be permissible to update your audit committee report this year, and have one less thing to worry about next year.


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