Information for Audit Committees

Audit committees play a vital role in the capital markets' investor protection framework through their oversight of the audit engagement and the company's financial reporting process. The Sarbanes-Oxley Act of 2002, as amended, enhanced the scope of the oversight role played by the public company audit committee by, among other things, making audit committees of listed companies “directly responsible for the appointment, compensation, and oversight” of auditors, imposing stricter independence requirements, and promoting increased audit committee expertise in financial reporting matters.

In 2015, the PCAOB published a new digital outreach communication to audit committees with the Audit Committee Dialogue, issued May 7, 2015. The first Dialogue highlights insights from PCAOB inspections, and discusses recurring areas of concern, and emerging risks related to increases in M&A, falling oil prices, and undistributed foreign earnings. The Dialogue also offers targeted questions that committee members may want to ask their auditors.

As part of its mission to protect the interests of investors and further the public interest in the preparation of informative, accurate and independent audit reports, the PCAOB is committed to constructive engagement with audit committees in areas of common interest, including auditor independence and audit quality. 

PCAOB resources that may be of particular interest to audit committee members include the following:

Standards

Auditing Standard No. 16, Communications with Audit Committees 

AS No. 16 was adopted by the Board in August 2012 and approved by the SEC in December 2012. The standard seeks to improve the audit by enhancing the relevance, timeliness, and quality of communications between auditors and audit committees. These enhancements should facilitate audit committees' financial reporting oversight, fostering improved financial reporting to the benefit of investors.   

Board Public Reports

Information for Audit Committees About the PCAOB Inspection Process (Aug. 1, 2012) 

Observations Related to the Implementation of the Auditing Standard on Engagement Quality Review (Dec. 6, 2013)

Staff Guidance

The Quality Control Remediation Process

Staff Audit Practice Alert No. 11, Considerations for Audits of Internal Control Over Financial Reporting (Oct. 24, 2013)

Recent Speeches and Statements Related to Audit Committees

The speeches and statements below contain expanded discussion of PCAOB actions bearing on the critical role of audit committees and are the views of the Board or staff member providing the speech.