I would like to thank the PCAOB staff in our Standards group for this effort to improve our standards in their flow and organization. This important project required much painstaking and detailed work, and for that I thank them.
I support the PCAOB's efforts to reorganize the Board's interim standards and the PCAOB-issued auditing standards into a topical structure, which will feature an integrated numbering system and follow the flow of the audit process. This proposed recodification will also end our reference to certain standards as "interim standards."
While we continue to work on issuing revised guidance as necessary, our standards are no longer "interim" standards, and this proposed recodification would confirm that.
In the interest of moving this project forward, we have not replaced all references in the standards to FASB standards that have themselves been superseded. I hope that we will receive comments from interested parties about whether such references may be sources of problems or confusion. For example, the current proposed standards contain references to superseded standards, such as FASB Statement No. 5, Accounting for Contingencies, whereas the current FASB designation for that standard is Accounting Standards Codification Topic 450, Contingencies, with some other portions of FASB Statement No. 5 located in ASC 310, Receivables, and in other Topics.
I also hope that we will receive comments on how the public believes the PCAOB can best continue to improve the organization and utility of our standards for the professionals who use them. In my opinion, the long term goal should be for us to have well-organized standards that are also readily searchable through the software tools available to practitioners, so that they can easily navigate the standards in ways that take advantage of modern practices and resources.
This recodification is, in my view, the first step in what may be a longer journey to improve the standards issued by the PCAOB. Ultimately, the PCAOB must strive to provide auditors of public companies with, to the greatest extent possible, a well-organized and easily useable set of standards. The framework we are proposing should serve as a roadmap for that journey. And there will be further steps needed to arrive at the goal.
As the release makes clear, we have also been mindful of the possible costs and benefits of the new codification as well as its potential effects on efficiency, competition and capital formation and specifically on emerging growth companies. As the release states, these changes do not impose any new obligations on auditors and while their implementation may require some effort for users to familiarize themselves with the new organization and taxonomy, in the longer run these temporary inconveniences should be more than overcome by improved usability.
For all these reasons, I support this proposal.