Commenters responding to the PCAOB’s concept release on engagement partners signing the public company audit report generally favored partner sign-off. The comment period closed on September 11, 2009. The Board’s current standard requires the firm itself to be the signatory on the audit report.
In 2006, the European Union's Audit Directive required the signature of a natural person on company audit reports, compelling a public discussion in the US on partner sign-off. This issue has been discussed by the Board’s own Standing Advisory Group; and the Treasury’s Advisory Committee on the Auditing Profession has recommended that the PCAOB undertake a standard setting initiative mandating that the engagement partner sign the auditor’s report.
In its comment letter, the Auditing Section of the American Accounting Association endorsed the signature requirement as a means of enhancing audit quality and increasing transparency for audit and financial statement users. The section noted empirical evidence that the Sarbanes-Oxley Section 302 requirement for CEO and CFO certification of financial statements has had a positive effect on the integrity of financial reporting.
Reasoning by analogy, the auditing group said that certification of the audit report by an audit partner, in the form of a personal signature, would have a similar positive effect on the performance of the audit. While acknowledge that current research does not definitively settle the issue of partner sign off, the audit section believes that there is a strong basis for anticipating that partners, and hence audit quality, would be affected by the accountability pressure resulting from providing a personal signature.
A professor of accounting wrote in favor of engagement partner sign-off, noting that this has long been the practice in Germany and Australia. The professor found no justification for the anonymity shrouding the identity of the engagement partner in the US. With the partner’s identity known, noted the professor, it is possible for interested parties to correspond with the signatory on particular auditing questions. In his comment letter to the Board, the professor said that he has recently conducted such correspondence in Australia and received useful replies from engagement partners.
A CPA opposed to engagement partner sign-off observed that the engagement partner already has to sign off on the files in order for the report to be issued. If this person does not already possess a strict sense of duty and understand the liability, said the commenter, then he or she should not be an engagement partner in a registered accounting firm. Moreover, the PCAOB and the SEC can make reports far more transparent with laws and regulations that do not require a signature.