On May 9, the Securities and Exchange Commission adopted the proposed new rules and related amendments to auditing standards (Rules). As reported in the January 8 edition of Corporate and Financial Weekly Digest, the Public Company Accounting Oversight Board (PCAOB) adopted and proposed the Rules for SEC approval to provide investors with more information about who participates in public company audits.
The Rules require auditors to disclose the following information: (1) the name of the engagement partner; (2) the name, location and extent of participation for each additional accounting firm that took part in the audit whose work represented 5 percent or more of the total audit hours; and (3) the number and aggregate extent of participation of all other accounting firms participating in the audit whose individual participation constituted less than 5 percent of the total audit hours. This information will be available through a searchable database on the PCAOB’s website.
The Rules, with respect to disclosure of the engagement partner, are effective for audit reports issued on or after January 31, 2017, and, with respect to disclosure of other auditors, are effective for audit reports issued on or after June 30, 2017.
The PCAOB announced that in the near future it expects to release staff guidance and other tools for firms to use in implementing the Rules.
See the complete text of the order here.