Project History: Firm and Engagement Metrics

Objective

Consider changes to PCAOB rules and forms in light of the increased disclosure and demand for firm and engagement metrics.

Most Recent Action

On November 21, 2024, the Board adopted amendments to its rules and reporting forms to require the reporting of specified firm-level metrics on new Form FM, Firm Metrics, and specified engagement-level metrics on an amended and renamed Form AP, Audit Participants and Metrics.

In brief, the Board’s amended rules and forms will: 

• Require reporting of firm-level metrics annually on a new Form FM, pursuant to a new PCAOB Rule 2203C, Firm Metrics, for firms that serve as lead auditor for at least one issuer that is an “accelerated filer” or “large accelerated filer” under SEC rules;
  

• Require reporting of engagement-level metrics for audits of accelerated filers and large accelerated filers on a revised Form AP; and
  

• Allow, but not require, limited narrative disclosures on both Form FM and Form AP to provide context and explanation for the required metrics.

Additional information on the new reporting requirements:

• Docket 041: Firm and Engagement Metrics
• News Release: PCAOB Adopts New Requirements To Standardize Disclosure of Firm and Engagement Metrics and To Modernize the PCAOB’s Reporting Framework

Background

On October 6, 2008, the U.S. Department of Treasury's Advisory Committee on the Auditing Profession ("ACAP") published a report detailing recommendations that would enhance the sustainability of a strong and vibrant public company auditing profession. This report contained a number of recommendations requiring action by several different organizations including regulators, professional bodies, and others. One of the ACAP recommendations suggested that the PCAOB, in consultation with auditors, investors, public companies, audit committees, boards of directors, academics, and others, determine the feasibility of developing key indicators of audit quality and effectiveness and requiring auditing firms to publicly disclose these indicators and, assuming development and disclosure of indicators of audit quality are feasible, require the PCAOB to monitor these indicators.  

Presently, some audit firms disclose certain firm-level level metrics publicly through their Audit Quality Reports, Transparency Reports, or other published reports. Other audit regulators either have or are considering initiatives related to the disclosure of firm metrics.

Status

On November 21, 2024, the PCAOB adopted amendments to its rules and reporting forms to require the reporting of specified firm-level metrics on new Form FM, Firm Metrics, and specified engagement-level metrics on an amended and renamed Form AP, Audit Participants and Metrics.

Subject to approval by the U.S. Securities and Exchange Commission (“SEC”), the final rules and reporting forms would take effect on October 1, 2027 with a phased implementation period as follows:

Firm-level metrics reporting:

• Firms that issued audit reports with respect to more than 100 issuers in 2027 – first reporting as of September 30, 2028 with Form FM due by November 30, 2028; and
• All other firms reporting would be as of September 30. 2029 with Form FM due by November 30, 2029.

Engagement-level metrics reporting 35 days after issuance of the auditor’s report:

• Firms that issued audit reports with respect to more than 100 issuers in 2026 – for audits of companies with fiscal years beginning on or after October 1, 2027; and
• All other firms – for audits of companies with fiscal years beginning on or after October 1, 2028.

Resources