Investor Bulletin – Opportunity To Comment on Proposals To Enhance Transparency Into Audits and Audit Firms 

April 26, 2024 

The Public Company Accounting Oversight Board (PCAOB or the “Board”) Office of the Investor Advocate is alerting investors to the opportunity to comment on proposals regarding (1) firm and engagement metrics and (2) firm reporting.

This document represents the views of the PCAOB Office of the Investor Advocate and not necessarily those of other PCAOB staff or the Board. It is not a rule, policy, or statement of the Board.

On April 9, 2024, the Board issued for public comment two proposals that would enhance transparency for investors and audit committees into audit firms and their audits of public companies. The proposals require new firm and engagement metrics (“Firm and Engagement Metrics Proposal”) and additional firm reporting (“Firm Reporting Proposal”).


Transparency is a cornerstone of the U.S. capital markets and fosters the ability of investors and others to make informed decisions. Investors are reliant on external auditors for informative, accurate, and independent audit reports while often lacking consistent, comparable information about audits and audit firms. A more transparent auditing industry should bolster public confidence in the profession and encourage high-quality audits.

Currently, investors have limited information regarding how audit firms are structured. And for certain important firm information, such as audit firm governance or network information, investors are dependent on voluntary, potentially inconsistent disclosures of the various audit firms.

Overview of the Proposals

The consistent, comparable, and transparent data required under the proposals would help investors and audit committees with audit-related decisions. These decisions include selecting and ratifying the selection of auditors; voting in board elections, including for directors who serve on the audit committee; overseeing the audit committee; and evaluating audit reports.

The Firm and Engagement Metrics Proposal would provide investors and audit committees with 11 decision-useful metric areas about audit firms and individual audits that comprise the overwhelming majority of the U.S. public company market capitalization.

The Firm Reporting Proposal would require audit firms to uniformly disclose certain information about their organization and operations.

Together, the proposals would help stakeholders make more informed judgments about individual audits and audit firms.

  • Read the Firm and Engagement Metrics Proposal here.
  • Read the Firm Reporting Proposal here.

Firm and Engagement Metrics Proposal

Proposed metrics under the Firm and Engagement Metrics Proposal include metrics about individual audits, such as:

  • Hours worked by senior professionals relative to more junior staff;
  • Hours spent by senior professionals on significant risks, critical accounting policies, and critical accounting estimates relative to total audit hours; and
  • The percentage of hours incurred prior to and following an issuer’s year end.

These newly public metrics could inform investors’ and audit committees’ assessments of whether a previous audit was appropriately staffed and whether time was well spent, in addition to other considerations. The Firm and Engagement Metrics Proposal would also shed light on audit firms’ general practices like average workload and the relationship between partners’ compensation and their internal quality performance ratings.

Firm Reporting Proposal

Under the Firm Reporting Proposal, audit firms would publicly report certain standard information about their organization and operations. Investors and audit committees could compare:

  • Dollar values of fees collected for audit services, other accounting services, tax services, and non-audit services;
  • Governance information regarding firm leadership, legal structure, ownership, and other similar topics;
  • Network information regarding network arrangements, network legal and ownership structure, financial obligations, information-sharing arrangements, and oversight of an audit firm; and
  • Policies and procedures to identify and manage cybersecurity events.

Added transparency around factors like quality control leadership and financial incentives in conducting an audit would enhance investors’ and audit committees’ comparisons and evaluations of audit firms.

The Firm Reporting Proposal would also enhance the PCAOB’s oversight of audit firms. It would update the confidential reporting by audit firms to the PCAOB to require prompt reporting for significant cyber events, to require the largest audit firms to provide the PCAOB with their financial statements, and to require more timely “special” reporting, including special reporting for events material to a firm’s organization, operations, liquidity or financial resources, or provision of audit services.

Enhancing confidential reporting would strengthen the PCAOB’s capacity to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports.

How to Comment on the Proposals

The Board is seeking public comment – including from investors – on the two proposals. Comments are due by June 7, 2024.

Comments can be sent by email (to [email protected]), by paper mail, or through the Board’s website:

  • Comment on the Firm and Engagement Performance Metrics Proposal here.
  • Comment on the Firm Reporting Proposal here.

The Office of the Investor Advocate encourages investors and others to submit comments on the Board proposals.