Encourages Board to Consider Costs and Benefits, International Coordination
Washington, DC – Center for Audit Quality Executive Director Cindy Fornelli released the following statement today ahead of the Public Company Accounting Oversight Board (PCAOB)’s public meeting on the Auditor’s Reporting Model Proposal.
“The public company auditing profession welcomes this week’s roundtable discussions on the PCAOB’s proposal to update the auditor’s report. The changes being contemplated are significant and would have a major impact on auditors, investors, companies, and audit committees.
“The CAQ supports changes that are practical and operational, add value for investors, and enhance—or at least maintain—audit quality. We hope these discussions will yield a robust dialogue on the implications for the proposal, including potential costs and benefits and the need for international coordination.
“As the PCAOB has acknowledged, its proposal to enhance the auditor's report marks a watershed moment, and changes of this magnitude must be carefully considered. To that end, the CAQ is currently coordinating a collaborative effort with members of the public company auditing profession to field-test the PCAOB’s proposal. The results should be available this summer and we look forward to sharing critical insights from this effort with the PCAOB and other stakeholders at that time.”
Working with the CAQ, the profession has put forth several thoughtful concepts over the last few years to improve the auditor’s reporting model. Selected examples include:
1. The CAM and Other Information approaches (or ‘frameworks’) included in the CAQ’s December 11, 2013 letter to the PCAOB.
2. A mandatory emphasis of matter framework published in late 2012.
3. Potential auditor assurance on information outside the financial statements, such as critical accounting estimates, as illustrated in mock reports provided to the PCAOB in 2011.
About the CAQ
The Center for Audit Quality (CAQ) is an autonomous, nonpartisan public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high quality performance by public company auditors, convenes and collaborates with other stakeholders to advance the discussion of critical issues requiring action and intervention, and advocates policies and standards that promote public company auditors’ objectivity, effectiveness and responsiveness to dynamic market conditions. Based in Washington, DC, the CAQ is affiliated with the American Institute of Certified Public Accountants. For more information, visit www.thecaq.org.