PwC submitted a comment letter on the SEC’s Concept Release on Possible Revisions to Audit Committee Disclosures (the “Concept Release”). We are supportive of mandating that audit committees make disclosures in the three broad categories discussed in the Concept Release: how they oversee the auditor, the process for appointing or retaining the auditor, and the qualifications of the audit firm and certain members of the engagement team. Enhancing transparency often serves to build trust and instill confidence in the capital markets; however, it is important to recognize and consider potential unintended consequences and evaluate whether the benefits outweigh the costs. Accordingly, we believe any rules should be principles-based and avoid prescribing the specific content of such disclosures. Instead, audit committees should be allowed flexibility in crafting disclosures within the three broad categories to recognize that one size does not fit all, help make the disclosures more meaningful, and perhaps reduce the likelihood of disclosures becoming boilerplate.
Our letter also includes our specific concerns about some of the topics discussed in the Concept Release. We highlight the possible unintended consequences, including the potential to chill the dialogue between the auditor and audit committee by potentially restricting the free exchange of information due to concerns over what might need to be disclosed.
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