PCAOB Publishes Staff Guidance on Implementing Changes to Auditor's Report
The Public Company Accounting Oversight Board today published staff guidance that describes changes to the auditor's report that become effective for audits for fiscal years ending on or after December 15, 2017.
The guidance addresses key changes to the auditor's report required this year, such as the form of the auditor's report, disclosure of auditor tenure, a statement on auditor independence, and a required explanatory paragraph on Internal Control Over Financial Reporting (ICFR) in certain circumstances.
"This guidance was prepared to help firms as they implement the first phase of changes to the auditor's report," said Martin F. Baumann, PCAOB Chief Auditor and Director of Professional Standards. "These changes will improve the relevance and usefulness of the auditor's report by providing additional information to investors."
On June 1, 2017, the Board adopted a new auditing standard, "The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion"( AS 3101) and related amendments. These were approved by the Securities and Exchange Commission on October 23, 2017.
The guidance also provides a high-level overview of the requirements regarding Critical Audit Matters (CAMs). Auditor communication of CAMs is permissible on a voluntary basis but will not be required until audits of fiscal years ending on or after June 30, 2019 (for audits of large accelerated filers) or December 15, 2020 (for audits of all other companies to which the requirements apply).
The PCAOB plans to monitor the implementation of the standard and may issue additional guidance, as needed.
The PCAOB also will host two webinars, on December 12, 2017, and January 10, 2018, on the implementation of recent changes to the auditor's report, which will include matters covered in this guidance.