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The Public Company Accounting Oversight Board, or PCAOB, has adopted new rules to provide investors with more information about who is participating in public company audits.  The rules are subject to SEC approval.

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:

  • The name of the engagement partner;
  • The names, locations, and extent of participation of other accounting firms that took part in the audit, if their work constituted 5 percent or more of the total audit hours; and
  • The number and aggregate extent of participation of all other accounting firms that took part in the audit whose individual participation was less than 5 percent of the total audit hours.

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 began this rulemaking process in 2009, in response to a recommendation of the U.S. Department of the Treasury’s Advisory Committee on the Auditing Profession, by seeking comment on whether the engagement partner should be required to sign the auditor’s report.  The requirement to provide disclosure on Form AP, rather than in the auditor’s report as previously proposed, is primarily a response to concerns raised by some commenters about potential liability and practical concerns about the potential need to obtain consents for identified parties in connection with registered securities offerings.

According to the PCAOB, investors commenting in the rulemaking process have generally stated a preference for disclosure in the auditor’s report. Under the final rules, in addition to filing Form AP, firms will also have the ability to identify the engagement partner and/or provide disclosure about other accounting firms participating in the audit in the auditor’s report. This is not required, but firms may choose to do so voluntarily. The Board believes that providing information about the engagement partner and the other accounting firms that participated in the audit on Form AP, coupled with allowing voluntary reporting in the auditor’s report, will achieve the objectives of enhanced transparency and accountability for the audit while appropriately addressing concerns raised by commenters.


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