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 The Auditor's Reporting Model

DATE: Sept. 15, 2011
SPEAKER: James R. Doty, Chairman
EVENT: PCAOB Roundtable
LOCATION: Washington, DC

Today's open meeting Roundtable of the Public Company Accounting Oversight Board will elicit the views of the 32 experts we have around the table this morning. You bring here such various backgrounds as investors, auditors, corporate board members, financial statement preparers, and academics. In this, the third public meeting on today's subject, the PCAOB wants to hear how we can improve the relevance and usefulness of auditors' reporting on the results of their audits of public company financial statements.

The PCAOB's consideration of the audit reporting model is intended to confront questions that recur in times of economic crisis. In the concept release we attempt to identify meaningful opportunities to enhance the relevance of auditors' communications with investors.

Our alternatives aim to enhance the relevance of the auditor's communication to investors. To highlight a statement we made in the concept release: the alternatives suggested do not aim to change the fundamental role of the auditor to perform an audit and attest to management's assertions as embodied in management's financial statements.

To be clear, they are not intended to put the auditor in the position of creating and reporting financial information for management.

As the concept release states, the alternatives are not mutually exclusive. A revised auditor's report could include one or a combination of these alternatives, or elements of these alternatives. Discussants may also suggest other alternatives to consider.

We are at a very early stage in this project. The concept release format allows us to frame today's discussion and the broader debate that will play out through the public comment process. It is not intended to lead inexorably to proposed requirements in any of the areas we have suggested.

Proponents of ideas, whether embodied in the release or introduced today, should come forward with evidence and analysis explaining why the idea is worthwhile. Both supporters and opponents of changes to the auditor reporting model should present persuasive support for positions they advocate.

We are in the middle of a long public comment period. I am confident today will not be the last public discussion of the concept release; but I encourage participants and members of the public who are interested in the project to follow up on today's discussion with any additional analysis or evidence they have to inform and help shape the project.

 

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