Chair Williams Statement on SEC Approval of Three PCAOB Standard-Setting and Rulemaking Actions That Will Protect Investors

Public Company Accounting Oversight Board (PCAOB) Chair Erica Y. Williams issued the following statement following the U.S. Securities and Exchange Commission’s (SEC) approval of AS 1000, General Responsibilities of the Auditor in Conducting an Audit; changes to PCAOB standards that clarify certain auditor responsibilities when using technology-assisted analysis; and amendments to PCAOB Rule 3502, Responsibility Not to Knowingly or Recklessly Contribute to Violations. 

“We thank our SEC colleagues for their review and approval of the PCAOB’s standard-setting and rulemaking actions related to AS 1000, auditor responsibilities when using technology-assisted analysis, and PCAOB Rule 3502. These changes are all wins for investors.

One of the Board’s top strategic goals is to modernize our standards and rules to ensure they are best fit to protect investors from today’s risks. Our markets are evolving every day. To keep investors protected in an era of rapid change, our standards and rules must keep up.

Today’s SEC approvals allow us to modernize in three crucial areas.

First, AS 1000 will help ensure that PCAOB standards are clear, consistent, and up to date when it comes to auditing fundamentals such as due professional care, professional skepticism, competence, and professional judgment. By replacing a group of standards that had not changed significantly since their adoption on an interim basis in 2003, the new standard also advances the Board’s strategic goal to modernize standards.

Second, our updates related to technology-assisted analysis reduce the risk that auditors who use technology-assisted analysis will issue an opinion without obtaining relevant and reliable audit evidence. The changes also modernize certain aspects of two essential PCAOB standards so they keep up with the increasing use of technology by auditors and preparers of financial statements.

Third, our update to Rule 3502 enables the PCAOB to hold associated persons accountable when they negligently, directly, and substantially contribute to firms’ violations. With this rulemaking, which updates a rule that is nearly 20 years old, the Board has aligned PCAOB rules to what investors expect: that when an associated person’s negligence directly and substantially contributes to firm violations, the PCAOB has tools to hold them accountable.

The Board thanks the many investors and other stakeholders who provided us input on these standard-setting and rulemaking actions, and we look forward to monitoring firms’ implementation of the changes and the effect on audit quality.”

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About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers registered with the Securities and Exchange Commission, including compliance reports filed pursuant to federal securities laws.

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