The Public Company Accounting Oversight Board (PCAOB) issued proposed modifications to auditor reporting standards on August 13, 2013. These proposals will follow the process, including concept release issued over two years ago, discussing possible changes to the standard auditor’s report that would provide more useful information to investors. The two new standards proposed by the PCAOB are:
1. addressing the content of the auditor’s report, and 2. imposing new auditor responsibilities regarding other information contained in an issuer’s annual report on Form 10-K.
The PCAOB’s proposed reporting standard would retain the “pass/fail” system, which the auditor provides either an unqualified opinion or a qualified opinion, adverse or disclaimed opinion on an issuer’s financial statements. Additionally, it retains many other elements of the current form of audit report. The auditor’s report would be expanded to include more information. The report would also include new elements related to auditor independence, auditor tenure, and the auditor’s evaluation of other information outside the financial statements. This proposal also includes enhancements to the existing language in the auditor’s report related to fraud and notes to the financial statements.
The other PCAOB proposed reporting standard would expand the auditor’s responsibilities regarding information contained in the issuer’s annual report, besides the financial statements, such as selected financial data, MD&A, and certain information incorporated by reference. The new standard would 1) apply the auditor’s responsibility for other information specifically to an issuer’s annual reports on Form 10-K; 2) add procedures for the auditor to perform in evaluating the other information based on relevant audit evidence obtained and conclusions reached during the audit; 3) require the auditor to evaluate the other information for a material misstatement of fact as well as material inconsistency with the financial statements; and 4) require communication in the auditor’s report about the auditor’s responsibilities for, and the results of, the auditor’s evaluation of the other information.
The Soreide Law Group represents Florida licensed CPA’s in front of the Florida Board of Accountancy (BOA) and the Public Company Accounting Oversight Board (PCAOB) regarding licensing issues. For more information about professional licensing law please call to speak at no cost with an attorney: (888) 760-6552.