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The PCAOB recently announced the adoption of a set of new requirements regarding public reporting of standardized firm and engagement metrics, as well as a separate set of amendments regarding the PCAOB framework for collecting information from audit firms. In the press release announcing these actions, the PCAOB notes:

With the firm and engagement metrics requirements adopted by the Board today, PCAOB-registered public accounting firms that audit one or more issuers that qualify as an accelerated filer or large accelerated filer will be required to publicly report specified metrics relating to such audits and their audit practices. These metrics – which will further PCAOB oversight activities and which can be used by investors, audit committees, and other stakeholders – cover the following eight areas:

1. Partner and manager involvement
2. Workload
3. Training hours for audit personnel
4. Experience of audit personnel
5. Industry experience
6. Retention of audit personnel (firm-level only)
7. Allocation of audit hours
8. Restatement history (firm-level only)

Reporting of firm-level metrics will be required annually on a new Form FM, for firms that serve as the lead auditor for at least one accelerated filer or large accelerated filer. Reporting of engagement-level metrics for audits of accelerated filers and large accelerated filers will be required via a revised Form AP, which will be renamed “Audit Participants and Metrics.” Finally, limited narrative disclosures will be allowed (but not required) on both Form FM and Form AP to provide context and explanation for the required metrics.

With regard to the amendments to the PCAOB reporting framework, the PCAOB notes in its press release:

Regarding firm reporting, the amendments adopted today will modernize the PCAOB’s annual and special reporting requirements to facilitate the disclosure of more complete, standardized, and timely information by registered public accounting firms. Consistent with current practice, much of the information will be disclosed publicly, such as enhanced fee, governance, and network information. Other information that is potentially proprietary, sensitive, or developing will be available to the PCAOB only for oversight.

Today’s amendments enhance the required current reporting of information by registered firms on the PCAOB’s public Annual Report Form (“Form 2”), and the Special Reporting Form (“Form 3”) in several key areas:

– Financial information – On Form 2, all registered firms will report additional fee information. The largest firms will also be required to confidentially submit financial statements to the PCAOB.
– Governance information – On Form 2, all registered firms will be required to report additional information regarding their leadership, legal structure, ownership, and other governance information, including reporting on certain key quality control operational and oversight roles.
– Network relationships – Registered firms will be required to report a more detailed description of any network arrangement to which a registered firm is subject. This includes describing the network’s structure, the registered entity’s access to resources such as audit methodologies and training, and whether the firm shares information with the network regarding its audits (including whether the firm is subject to inspection by the network).
– Special reporting – For annually inspected firms, the amendments include a new confidential special reporting requirement for events material to a firm’s organization, operations, liquidity or financial resources, such that they affect the provision of audit services.
– Cybersecurity – On Form 3, confidentially, registered firms will be required to promptly report significant cybersecurity events to the PCAOB. On Form 2, registered firms will also be required to periodically and publicly report a brief description of any policies and procedures to identify and manage cybersecurity risks.
– Updated description of QC policies and procedures – A new form will require any firm that registered with the Board prior to the date that the PCAOB’s new quality control (QC) standard becomes effective (December 15, 2025) to submit an updated statement of the firm’s quality control policies and procedures pursuant to the QC standard.

These amendments are subject to approval by the SEC and, if approved by the SEC, will become effective pursuant to a phase-in schedule.

– Dave Lynn