On March 26, the Public Company Accounting Oversight Board (PCAOB) proposed a framework for reorganizing the existing interim and PCAOB-issued auditing standards into a topical structure with a single integrated numbering system (the "Release"). In addition, the PCAOB is proposing certain related amendments to its rules and auditing standards, and proposing to rescind certain interim auditing standards that the PCAOB believes are no longer necessary under the proposed reorganization. The Release states that the amendments are not expected to impose new requirements on auditors or substantively change the requirements of the PCAOB standards.
In April 2003, the PCAOB adopted, on an interim basis, the generally accepted auditing standards of the Auditing Standards Board of the American Institute of Certified Public Accountants that were then in existence. For those "interim auditing standards," the PCAOB retained the organization and reference numbers ("AU" sections) used in the ASB's preexisting codification of its standards.
Over the last 10 years, the PCAOB has issued 16 new standards that, collectively, have superseded 10 interim standards and amended the majority of the remaining auditing standards to varying degrees. The standards issued by the PCAOB have been numbered sequentially based on the order in which they were issued.
Consequently, the PCAOB’s existing standards consist of sequentially numbered standards (AS Nos. 1-16) issued by the PCAOB and the AU sections representing the remaining interim standards that the PCAOB has not superseded.
To enhance the usability of its auditing standards, the PCAOB is proposing to reorganize its existing auditing standards into a topical structure with a single integrated numbering system. The proposed reorganization is intended to present the standards in a logical order that generally follows the flow of the audit process. The proposed reorganization also is intended to help users navigate the standards more easily, for example, to find the relevant standard for a particular area of the audit.
The proposed reorganization of PCAOB auditing standards would involve reordering and renumbering existing standards in their entirety, without redrafting the auditing standards or making substantive changes to the requirements of the standards.
Proposed framework for reorganization
Under this proposal, all PCAOB auditing standards would be grouped into the following categories: general auditing standards, audit procedures, auditor reporting, matters relating to filings under federal securities laws, and other matters associated with audits.
Subcategories within each of the above categories would further organize similar topics, such as standards related to auditor communications in the general auditing standards category.
Each standard would be assigned a unique section number, based on a four-digit numbering system the use of which would facilitate the grouping of auditing standards into logical categories and subcategories by topic and avoid potential confusion with the standards of the IAASB or ASB. The integrated referencing system would use an "AS" prefix to identify the auditing standards. Appendix 1 of the Release illustrates the proposed reorganization framework, including the categories and subcategories.
Potential future amendments to PCAOB auditing standards and rules
Implementation of the proposed reorganization of PCAOB auditing standards will also require a number of amendments to PCAOB rules and standards, some of which are included in the Release, to update the reference numbers and cross references to reflect the new section numbers, to remove references to rescinded standards and, in some cases, to change titles of certain standards to more accurately reflect the content of those standards, among other matters. These amendments are not expected to impose new requirements on auditors or substantively change the requirements of PCAOB standards.
After considering comments on this Release and potential changes to the reorganization framework and related amendments, the PCAOB intends to release and seek public comment on all of the amendments necessary to implement the reorganization of the auditing standards, along with a functioning online version of the proposed reorganized auditing standards.
Comments on the proposed framework are due on May 28, 2013.
PwC clients who have questions about this In brief should contact their engagement partner. Engagement teams that have questions should contact the National Professional Services Group (1-973-236-7800).
Julie Anne Dilley