PCAOB Issues Staff Consultation Paper Seeking Comment on Improving Standards for the Auditor’s Use of the Work of Specialists
The Public Company Accounting Oversight Board today issued for public comment a staff consultation paper that seeks input on potential changes to standards for the auditor's use of the work of specialists, specifically the objectivity and oversight of specialists and the use of their work in audits.
Staff Consultation Paper No. 2015-01, The Auditor's Use of the Work of Specialists, discusses the increase in the use and importance of specialists in recent years due, in part, to the increasing complexity of business transactions reported in a company's financial statements.
"The use of the work of specialists is important to investors because it can help an auditor detect material misstatements in complex areas of a company's financial statements," said PCAOB Chairman James R. Doty. "We want our standards to keep pace with realities in the marketplace, and I look forward to receiving public comment on this important topic."
The paper raises questions about whether PCAOB standards adequately address the auditor's use of the work of specialists, and whether more rigorous standards and specific procedures are needed in this regard to help the auditor respond to the risks of material misstatement in financial statements. The staff is seeking input on possible alternatives to address the issues discussed in the paper.
Auditors of many public companies increasingly use the work of specialists with expertise in fields other than accounting and auditing — such as valuation specialists, appraisers, engineers, and actuaries — who can bring necessary expertise to bear on complex areas.
"This consultation paper is a key part of our outreach and seeks comments from all stakeholders," said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards. "The comments will inform the staff's potential recommendation that the Board propose changes to auditing standards governing the auditor's use of the work of specialists for the benefit of the investing public."
The staff consultation paper solicits information and views from investors, accounting firms of all sizes, specialists, companies, and others. Comments are due July 31, 2015.
The staff also is requesting information about current practices and the economic impact of potential changes to standards, including data, to inform the PCAOB's economic analysis associated with this project.
The Board also announced today that a Standing Advisory Group meeting on June 18, 2015, in Washington, will include, among other topics, a discussion of matters related to the auditor's use of the work of specialists.
A fact sheet on the consultation paper also is available.