What Was Changed
The amendments adopted by the Board strengthen the requirements for evaluating the work of a company's specialist, whether employed or engaged by the company. They are designed to increase audit attention in areas where a specialist is used and to align the applicable requirements with the PCAOB's risk assessment standards.
The amendments also apply a supervisory approach to both auditor-employed and auditor-engaged specialists.
The Board amended two existing auditing standards, AS 1105, Audit Evidence, and AS 1201, Supervision of the Audit Engagement. The Board retitled and replaced AS 1210, Using the Work of a Specialist, with a new AS 1210, Using the Work of an Auditor-Engaged Specialist.
Additional information on these amendments:
- SEC Action: Release No. 34-86270
- Auditing Standard: AS 1210, Using the Work of an Auditor-Engaged Specialist; AS 1105, Audit Evidence; AS 1201, Supervision of the Audit Engagement
- Adopting Release: PCAOB Release No. 2018-006
- Fact Sheet: Adoption of Amendments on the Auditor’s Use of the Work of Specialists
- Project History: Auditor's Use of the Work of Specialists
Why Did the PCAOB Adopt This Standard?
The use of the work of specialists continues to increase in both frequency and significance. If a specialist's work is not properly overseen or evaluated by the auditor, there may be a heightened risk that the auditor's work will not be sufficient to detect a material misstatement in accounting estimates.
The amendments are also designed to be risk-based and scalable so that the auditor's work to evaluate the specialist's work is commensurate with the risk of material misstatement.
These amendments should lead to more uniformly rigorous practices among audit firms of all sizes and enhance audit quality and the credibility of information provided in financial statements.
What Are the Effective Dates?
The amendments are effective for audits of fiscal years ending on or after December 15, 2020.
The PCAOB staff provides guidance that highlights aspects of new requirements that apply when auditors use the work of specialists in an audit and when an auditor uses the work of a company specialist as audit evidence.
Staff Presentation (May 2020)
The PCAOB staff produced a video on the implementation of Auditor’s Use of the Work of Specialists.
We welcome your feedback and questions. After you've watched the video, please compete this short survey.
Assessing Initial Implementation
PCAOB staff will conduct economic analysis to assess the initial implementation of new requirements for auditing accounting estimates and using the work of specialists.
To inform the analysis, the staff will analyze relevant data, conduct surveys, and interview stakeholders.
The staff also issued a request for comment to collect information on initial experiences with the new requirements.
The PCAOB expects to produce a report in 2022 to communicate findings and perspectives on the initial impact of the new requirements.
Further information on the interim analysis is available in the post-implementation review section of this website.
Evaluating Overall Impact
Because some of the effects of the new requirements may take several years to fully manifest or stabilize, after a reasonable period of time, the PCAOB will conduct a full post-implementation review.
The staff will reevaluate the costs and benefits of the new requirements, including any unintended consequences, to understand the overall impact on the audit profession, public companies, and users of financial statements.