Fact Sheet: Staff Consultation Paper on the Auditor's Use of the Work of Specialists (May 28, 2015)

The PCAOB issued a staff consultation paper from the Office of Chief Auditor to seek information and input to help staff address the potential need for improvement of PCAOB standards governing the auditor's use of the work of specialists.

Staff Consultation Paper No. 2015-01, The Auditor's Use of the Work of Specialists, covers:

Potential Need for Improvement in Standards Governing the Auditor's Use of the Work of Specialists

  • The use and importance of specialists has increased in recent years, for both companies and audit firms, in part due to increasing complexity in business transactions and the resulting complexity of information needed to account for and audit those transactions.
  • This complexity may give rise to areas of financial statements that are more susceptible to risks of material misstatement.
  • PCAOB standards that govern the auditor's use of the work of specialists (other than the standard for the auditor's employed specialists) are largely the same as when originally adopted by the AICPA in the early 1970s and may need to be updated.
  • Today:
    • The auditor supervises its own employed specialists under Auditing Standard No. 10, Supervision of the Audit Engagement;
    • The auditor oversees a third-party specialist engaged by the firm under AU sec. 336, Using the Work of a Specialist;
    • That same standard, AU sec. 336, also applies to the auditor's use of the work of a specialist employed or engaged by a company being audited.
  • Auditing Standard No. 10 provides basic principles for an auditor's supervision of the audit engagement. It does not provide specific direction for applying those requirements to an auditor's specialist.
  • AU sec. 336 requires the auditor to evaluate the relationship of an auditor's engaged specialist to the client, including circumstances that might impair the specialist's objectivity, but does not provide specific requirements for how to perform the evaluation.

Alternative Regulatory Approaches upon which Staff is Seeking Comment

For each of the topics below, the staff consultation paper identifies alternatives for potential improvements to PCAOB standards:

Auditor's Specialist — Oversight: The paper includes potential requirements to improve the auditor's oversight of the work of an auditor's specialist, whether employed or engaged.

Auditor's Specialist — Objectivity: The paper includes potential requirements to improve the auditor's evaluation of the objectivity of an auditor's engaged specialist. Those requirements are based on the independence requirements in Rule 2-01 of Regulation S-X of the Securities and Exchange Commission.

Company's Specialist: The paper includes alternatives that, in the staff's view, would improve the auditor's evaluation of the work of a company's specialist. Both alternatives would require more rigorous procedures than those required by AU sec. 336.


  • This staff consultation paper has been informed by, among other things, current accounting firm practices, findings from the Board's oversight activities, discussions with the Board's inspections and enforcement staff and the Board's advisory groups, and comment letters submitted to the Board on other matters.
  • The staff consultation paper seeks additional information and views from investors, accounting firms of all sizes, specialists, companies, and others about current practices, the potential need for changes, and possible alternatives.
  • The staff consultation paper requests information about the possible economic impact of potential standard setting, including data, to inform the PCAOB's economic analysis associated with this project.
  • In August 2014, the PCAOB issued a staff consultation paper on auditing accounting estimates and fair value measurements, including how a potential new standard might address the varying circumstances when auditors obtain information from third parties, including specialists. The estimates and fair value project is ongoing, and the staff anticipates that some of the comments submitted on the specialists consultation paper may be relevant to the estimates and fair value 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.