June 7, 2024

Comment Letter | PCAOB Firm and Engagement Metrics Proposal

In our letter we detail our views on the following:

  1. Support for an alternative approach to disclosure of certain firm-level metrics that is scalable;
  2. Support for an alternative approach that focuses on discussion related to certain engagement-level metrics with the audit committee;
  3. Overall concerns related to the PCAOB’s Proposal, including:
    • Certain of the proposed metrics will inevitably be misinterpreted, and auditors preparing written narratives that attempt to guess and address a wide range of questions will add significant costs that will not meaningfully improve audit quality.
    • The economic analysis does not provide a sufficient basis for SEC approval, and we are concerned the costs to comply with the Proposal will far exceed the benefits.
    • The Proposal is not sufficiently scalable for smaller firms.
    • Requiring public disclosure of certain proposed metrics could have competition-lessening effects.
    • The PCAOB’s statutory authority to require aspects of the reporting of the proposed metrics is not clear.
    • Reporting of engagement-level metrics could be in tension with client confidentiality obligations.
  4. Other matters, including:
    • The importance of applying a materiality threshold to reporting requirements;
    • The need for further outreach and exploration, including pilot testing, and the impact on the effective date; and
    • Issues related to inclusion of metrics in the auditor’s report.

Read the full comment letter here.