Comment Letter Analysis

PCAOB Docket No. 051, Proposed AS 2405

Noncompliance with Laws and Regulations (NOCLAR) Comment Letter Analysis

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The PCAOB received 139 comment letters in response to its Proposed Amendments to PCAOB Auditing Standards related to a Company’s Noncompliance with Laws and Regulations and Other Related Amendments (NOCLAR proposal).

Although the NOCLAR proposal has drawn the attention of various stakeholder groups, there is consistency in the viewpoints expressed in a large majority of the 139 comment letters. Based on our analysis, we noted that commenters took the following positions:

  • The majority of commenters, 109 comment letters (or approximately 78%), opposed the NOCLAR proposal.
  • The minority of commenters, 18 comment letters (or approximately 13%), supported the NOCLAR proposal.
  • A smaller set of commenters, 12 comment letters (or approximately 9%), did not state a clear position.

We believe all stakeholders are looking toward the same goal: modernizing the auditing standards and continuing to enhance audit quality in order to protect the public interest and best serve investors. However, views on how that goal should be achieved vary.

In our analysis, we noted that much of the feedback from commenters was focused in the following key areas:

  • The scope of the proposal
  • The role of the auditor versus the role of management
  • Auditors are not lawyers
  • Costs and benefits of the proposal
  • The need for further study and evaluation

For more details, download and read our full analysis.

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