PwC believes the reproposal will improve the auditor's performance in auditing related parties, significant unusual transactions, and transactions with executive officers.
PwC submitted a comment letter supporting the PCAOB’s reproposed auditing standard, Related Parties, and reproposed amendments relating to significant unusual transactions and financial relationships and transactions with executive officers. PwC believes the reproposal has been improved by greater alignment with the Board’s risk assessment standards, but offers suggestions to further improve it prior to adoption.
PwC believes the expected audit effort and extent of procedures to test the accuracy and completeness of a company’s related parties and relationships and transactions with related parties is unclear and may result in inconsistent practice. PwC believes the PCAOB should clarify that the auditor should perform procedures on the information identified in Appendix A for purposes of evaluating whether the company has properly identified its related parties and relationships and transactions with related parties when the auditor is already required to perform audit procedures on that information by other auditing standards or through the performance of auditing procedures in other areas.
PwC agrees with the PCAOB’s observation that smaller companies, some of which may be Emerging Growth Companies and brokers and dealers, may engage in more related party transactions, which will result in higher audit costs but is commensurate with the risk of material misstatement. As a result, PwC supports applying the reproposal to all audits performed in accordance with PCAOB standards.