Fact Sheet: Transparency Proposal Alternative to Allow Disclosure of Certain Audit Participants on a New PCAOB Reporting Form

The Public Company Accounting Oversight Board issued a supplemental request for comment on a rulemaking initiative that seeks to increase transparency in audits by disclosing the name of the engagement partner and other participants in the audit.

Rather than using the auditor's report as the vehicle for disclosing the name of the audit engagement partner and others, as previously proposed, the Board is considering the use of a new, separate form: Form AP — Auditor Reporting of Certain Audit Participants. This alternative could provide information about participants in the audit, which investors have consistently sought throughout the Board's rulemaking process while responding to concerns raised by accounting firms and other commenters about the potential for increased auditor liability or litigation risk.

Although auditors would not be required to include the information in the auditor's report, auditors could choose to do so in addition to filing Form AP.

Form AP — Auditor Reporting of Certain Audit Participants

  • To be filed on the Board's website and would be available in a searchable database. Users would be able to search Form APs by engagement partner and by company.
  • The Board is considering a basic filing deadline of 30 days after the date the auditor's report is first included in a document filed with the SEC, with a shorter deadline of 10 days for IPOs to ensure the information would be available before any IPO road show.
  • Firms would file Form AP through the PCAOB's existing web-based Registration, Annual, and Special Reporting system using the username and password they were issued in connection with the registration process. The Board would develop a template, also known as a schema, which would allow firms to submit multiple forms simultaneously using an extensible markup language (XML).

Other Participants in the Audit

In addition to the method of disclosure, the Board is also considering narrowing the disclosure requirements regarding other participants in the audit. In light of comments received on previous proposals, the Board is reexamining the proposed requirement to disclose information about non-accounting firm participants.

Rulemaking Rationale and History

  • The Board began in 2005 to seek advice on and explore a variety of alternatives to make the auditor's report more informative, including by requiring disclosure of the name of the engagement partner. 
  • In addition to the Board's efforts, in 2008, the U.S. Department of the Treasury's Advisory Committee on the Auditing Profession issued its final report recommending, among other things, that the PCAOB "undertake a standard-setting initiative to consider mandating the engagement partner's signature on the audit report." 
  • In July 2009, the Board issued a Concept Release on requiring the engagement partner to sign his or her own name to the audit report. 
  • In October 2011, the Board issued a proposal that, among other things, would have required disclosure of the name of the engagement partner without requiring a signature and also required disclosure of other participants in the audit. Related information is available on the PCAOB website
  • In December 2013 the Board issued a reproposal that, among other things, would have required disclosure of the name of the engagement partner in the auditor's report, along with the name, location, and extent of participation of other accounting firms, and the location and extent of participation of the non-accounting firm participation. The 2013 reproposal no longer required disclosure in the auditor's report of the names of other persons that are not employed by the auditor when referring to persons or entities other than a public accounting firm.