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Objective

Strengthen and modernize the existing requirements and impose a more uniform approach to the lead auditor's responsibilities, including the supervision of other auditors. 

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Most Recent Action

On June 21, 2022, the Board approved amendments to its auditing standards, including adoption of a new auditing standard (AS 1206, Dividing Responsibility for the Audit With Another Accounting Firm), to strengthen requirements for audits involving accounting firms and individual accountants outside the accounting firm that issues the auditor’s report.

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Background

The roles of other accounting firms and individual accountants in audits (collectively, "other auditors") have taken on greater significance with the increasingly global operations of companies. The lead auditor often involves other auditors at various locations of the company, including in areas of the audit where there is a high risk of material misstatement in the financial statements. Working with other auditors can differ significantly from working with individuals in the same firm, creating challenges in the coordination and communication between the lead auditor and other auditors, including misunderstandings regarding the audit effort needed to meet the objectives of other auditors' work. Without adequate supervision by the lead auditor, deficiencies in other auditors' work can result in deficient audits.

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Status

Subject to approval by the Securities and Exchange Commission, the amendments and new standard will take effect for audits of financial statements for fiscal years ending on or after December 15, 2024.


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Resources