By Elena Eyber, J.D.
The PCAOB has released two proposals aimed at enhancing audit firm transparency, bringing consistency to the disclosure of audit firm and engagement metrics, and helping the PCAOB conduct its oversight. The first proposal mandates registered public accounting firms auditing accelerated filers to annually disclose specified metrics concerning their audit practices, covering areas like partner involvement and audit resources. The second proposal focuses on modernizing the PCAOB's reporting framework by amending annual and special reporting requirements, addressing areas such as financial information, audit firm governance, and cybersecurity. The PCAOB requests comments on both proposals by June 7, 2024 (Firm and Engagement Metrics, PCAOB Release No. 2024-002, April 9, 2024; Firm Reporting, PCAOB Release No. 2024-003, April 9, 2024).
The first proposal focuses on standardized disclosure of firm and engagement metrics, requiring registered public accounting firms auditing accelerated filers to publicly report specified metrics related to their audit practices annually. These metrics cover various aspects such as partner and manager involvement, workload, audit resources, and quality performance ratings. The proposal seeks to address inconsistencies in current voluntary reporting practices and increase the availability of decision-relevant information for investors and audit committees.
The second proposal aims to modernize the PCAOB's reporting framework by amending annual and special reporting requirements for registered public accounting firms. Key areas addressed in this proposal include financial information, audit firm governance, network information, special reporting, and cybersecurity. By enhancing reporting requirements and facilitating more complete, standardized, and timely information disclosure, the PCAOB aims to provide informative and useful data to investors, audit committees, and other stakeholders.
“Sound and consistent information bolsters confidence in our capital markets, and can drive audit quality,” said PCAOB Chair Erica Y. Williams. “Informed by extensive study and stakeholder input, today’s proposals would strengthen PCAOB oversight and equip investors, audit committees, and others with clear, consistent, and actionable data related to the audit.”
These are PCAOB Release Nos. 2024-002 and 2024-003.