In brief: PCAOB reproposes amendments to disclose name of engagement partner and certain other participants in audits (No. 2013-49)

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In brief 12/09/2013 by Assurance services
In brief: PCAOB reproposes amendments to disclose name of engagement partner and certain other participants in audits (No. 2013-49)

At a glance

The PCAOB reproposal would require disclosure in the auditor's report of the name of the engagement partner and information about certain other participants in the audit.

What's new?

On December 4, the Public Company Accounting Oversight Board ("PCAOB" or the “Board”) reproposed for public comment amendments to the PCAOB’s auditing standards (the “reproposed amendments”) that would require disclosure in the auditor’s report of the name of the engagement partner and information about certain other participants in the audit.

The reproposed amendments follow up the PCAOB’s October 2011 proposal and July 2009 Concept Release. 

What are the key provisions?

The reproposed amendments are intended to improve the transparency of audits by providing in the auditor’s report the name of the engagement partner and information about others whose participation in the audit represented at least 5 percent of the total audit hours, including the hours incurred in performing interim reviews. Disclosure of aggregate percentages is required for other participants in which the total audit hours individually are less than 5 percent.

The Board has assumed that the engagement partners and participating accounting firms named in the auditor’s report would have to consent to the inclusion of their names.  

Disclosure of the name of the engagement partner

The reproposed amendments would require the name of the engagement partner for the most recent period’s audit to be disclosed in the auditor’s report. The reproposed amendments no longer include the October 2011 proposed requirement for audit firms to disclose the name of the engagement partner in the Form 2 annual report they are required to file with the PCAOB.

Disclosure about certain other participants in the audit

The reproposed amendments would also require the inclusion of information about certain other participants in the audit in a paragraph that would follow the opinion or any other explanatory paragraphs in the auditor’s report itself or in an appendix immediately following the auditor’s report that would be referenced in the auditor’s report. The information to be disclosed would be:

  • With respect to other independent public accounting firms, including firms within the network, the name of the firm(s); with respect to persons not employed by the auditor, the phrase “persons not employed by our firm” is included instead of a specific name  
  • The country in which other participants in the audit are located
  • The percentage of the total hours, either as a single number or within a series of ranges, attributable to the audits or audit procedures performed by the other participants in the most recent period’s audit

The reproposed amendments would require disclosure in the auditor’s report of persons engaged by the auditor with specialized skill or knowledge in a particular field other than accounting or auditing. However, persons employed or engaged by the company who provided direct assistance to the auditor are excluded from the disclosure requirement.

The reproposed amendments would require disclosure of offshored work (e.g., shared service centers) if the work is performed by entities that are distinct from, but may be affiliated with, the registered firm that issues the report.  

Who's affected?

The reproposed amendments are applicable to audits conducted in accordance with PCAOB standards; however, the Board is soliciting comments on whether the reproposed amendments should apply to audits of emerging growth companies (EGCs) and audits of brokers and dealers.

What's the proposed effective date?

The release does not specify a proposed effective date for the reproposed amendments.

What's next?

Comments on the reproposed amendments are due on February 3, 2014.

Questions?

PwC clients who have questions about this In brief should contact their engagement partner. Engagement teams that have questions should contact Marc Panucci (1-973-236-4885), James Anderson (1-973-236-5738), or Julie Anne Dilley (1-646-471-3205) in the National Professional Services Group.

Authored by:

Marc Panucci
Partner
Phone: 1-973-236-4885
Email: marc.a.panucci@us.pwc.com

James D. Anderson
Partner
Phone: 1-973-236-5738
Email: james.d.anderson@us.pwc.com

Julie Anne Dilley
Director
Phone: 1-646-471-3205
Email: julie.anne.dilley@us.pwc.com