January 21, 2016

PCAOB Makes Progress on Strategic Plan Initiatives

Among the noteworthy aspects of the PCAOB’s 5-year strategic plan that was recently approved are its list of accomplishments and progress measures since 2012 and enhanced going-forward strategies relative to its Audit Committee Outreach initiative, which supports one of its principal objectives to “make a positive difference in the market for audit services and advance trends for quality financial reporting”:

Actions Taken since November 2012

  • Developed materials, such as Audit Practice Alerts Nos. 10, 11, 12, 13, summary reports on inspections observations on internal control over financial reporting audits, triennial inspections, engagement quality review, and risk assessment to engage audit committees in areas of common interest.
  • Included focused guidance to audit committees in inspection reports, general reports and audit alerts on using the reports and alerts.
  • Engaged the SAG, IAG and other groups, in discussion to further explore areas of common interest, including an extended discussion at the May 2013 SAG and October 2014 IAG meetings.
  • Engaged small firm auditors through the Forums on Auditing in the Small Business Environment on the relationship between the auditors and audit committees.
  • Monitored certain non-U.S. regulators’ respective plans for audit committee outreach initiatives and results.
  • Enhanced participation by Board members and staff in outreach events focused on audit committee members.
  • Updated the PCAOB website to include information tailored for audit committees
  • Solicited views and began evaluating feedback from certain audit committee members on how the Board may improve the usefulness of its publicly issued inspection reports.
  • Issued a communication to audit committees — Audit Committee Dialogue  – the first in a series intended to provide insights from inspections of public company auditors that may be helpful to audit committee members in their oversight of auditors.

While the PCAOB admittedly (see PCAOB Chair Doty’s speech) doesn’t oversee audit committees and (appropriately) claims to be cautious about not adding to their “burden,” the outreach efforts both proactively and responsively effect awareness and education and calls for insights from audit committees to assist in their robust oversight obligations, which is a laudable objective.

See KPMG’s Audit 2020 survey report highlighting how technology and the proliferation of data and analytics are (or should be) transforming the audit profession without compromising the fundamental needs for audit quality and accuracy.

Audit Committees: Unfair Scrutiny?

Particularly noteworthy and surprising in SEC Chair White’s and Chief Accountant Jim Schnurr’s addresses at the recent annual AICPA Conference were the sweeping concerns they expressed about audit committee workload, composition, and performance of oversight responsibilities.

Among other things, the criticisms aimed at increasing workload and purportedly corresponding diminishing effectiveness seem unwarranted in the context of the seemingly limitless direct and indirect regulatorily-mandated duties and obligations imposed by SOX, securities laws, NYSE and Nasdaq audit committee-related listing standards and PCAOB standards (among others) – presumably with more on the way (e.g., Audit Committee Disclosure, Audit Quality Indicators).

See this Akin Gump post – and this post and article from the WSJ.

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– Cyber Insurance Tips
– Survey: Most CAE’s Report Functionally to Audit Committee
– Startup Board Mistakes
– EU Audit Reforms: Impacts on US Companies
– Compliance Officer-Whistleblowers Raise Concerns


– by Randi Val Morrison