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 their company's financial reporting process.

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 and information sharing with audit committees in areas of common interest, including auditor independence and audit quality.

Audit Committee Resource: Critical Audit Matters (July 2019)

The new requirement for CAMs is a result of the PCAOB’s 2017 standard AS 3101, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, which made significant changes to the auditor’s report. The standard is intended to make the auditor’s report more informative and relevant to investors and other financial statement users by shedding light on areas of the audit requiring especially challenging, subjective, or complex auditor judgment. 

This document aims to inform audit committees as they engage with their auditors on the new CAM requirements.

Read the Audit Committees Resource: Critical Audit Matters

Staff Guidance on Communication with Audit Committees Concerning Independence

The PCAOB posted staff guidance on PCAOB Rule 3526, Communication with Audit Committees Concerning Independence. The guidance provides background on Rule 3526 and technical guidance for auditors on the independence-related communications required by the rule. The overview document summarizes the staff guidance for audit committees, investors, and other interested parties.

PCAOB Announces New Liaison for Investors, Audit Committees, and Preparers

Erin Dwyer has been named deputy director of the Office of External Affairs where she will serve as the direct point of contact for and liaison to investors, audit committees, and preparers.

Read the news release

2019  Staff Inspections Outlook for Audit Committees

The PCAOB staff outlined in this inspections outlook for audit committees what audit committees should expect from the PCAOB's 2019 inspections. This publication was a supplement to the Inspections Outlook for 2019.

Implementation of Critical Audit Matters: The Basics

The PCAOB released three staff guidance documents to support the implementation of the new critical audit matter (CAM). The Implementation of Critical Audit Matters: The Basics document is a high-level overview that may be of interest to audit committees. In the document, the PCAOB staff address the definition of a CAM, communications of CAMs, interactions with the audit committee and management, and other high-level details about CAMs. 

AuditorSearch: Find Engagement Partners and Other Information

AuditorSearch logo

Through AuditorSearch, audit committee members may find the names of the engagement partners and other accounting firms that participate in the audits of public companies that trade in the U.S.

Explore AuditorSearch

Adoption of a New Standard on the Auditor's Report

The PCAOB adopted a new auditing standardPDF in 2017 to enhance the relevance and usefulness of the auditor's report by providing additional and important information to investors.

The new standard and related amendments require auditors to include in the auditor's report a discussion of the critical audit matters (CAMs) which are matters that have been communicated to the audit committee, are related to accounts or disclosures that are material to the financial statements, and involved especially challenging, subjective, or complex auditor judgment. Read more information on the new standard.

Board Reports and Staff Briefs on PCAOB Inspections

PCAOB Report on 2017 Inspections of Broker-Dealer Audtiors Shows Audit Deficiencies Remained High, While Fewer Independence Violations Were Found (Aug. 20, 2018) – This inspection brief provides insights into PCAOB inspections for investors, auditors, audit committees, and others. The PCAOB also issued Executive Highlights of the report.

PCAOB Staff Inspection Brief about 2017 Inspections of Auditors of Public Companies (Aug. 2017) – The brief is discusses significant audit risks that by PCAOB inspectors targeted in 2017, and encouraged auditors to work to improve audit quality.

View more information about PCAOB inspections.

Audit Quality Indicators Project

PCAOB Podcast on Audit Quality Indicators

Audit quality indicators are a potential portfolio of quantitative measures that may provide new insights into how high quality audits are achieved. Taken together with qualitative context, the indicators may inform discussions among those who are concerned with the financial reporting and auditing process, such as audit committees and audit firms. Enhanced discussions, in turn, may strengthen audit planning, execution, and communication.

Read more about the Audit Quality Indicators project.

Standard-Setting Projects

The PCAOB recently adopted two standard-setting projects. See all recently completed standard-setting activities.

For all active projects, see research and standard-setting projects.

Auditing Accounting Estimates, Including Fair Value Measurements

The PCAOB adopted a new standard to enhance the requirements that apply when auditing accounting estimates, including fair value measurements. The new standard replaces three existing PCAOB standards on auditing accounting estimates, fair value measurements, and derivative instruments. The rulemaking also strengthens existing requirements by focusing auditors on estimates with a greater risk of material misstatement and emphasizing the use of professional skepticism. 

The new standard and related amendments are pending approval by the SEC.

Read the news release about adopting the estimates standard

Auditor’s Use of the Work of Specialists

The PCAOB adopted amendments to the auditing standards to strengthen requirements that apply when auditors use the work of specialists in an audit. The amendments are intended to strengthen the requirements by increasing audit attention in areas where a specialist is used and aligning the applicable requirements with the PCAOB risk-assessment standards.

The amendments are pending approval by the SEC.

Read the news release about adopting the specialists amendments