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State Board Report

January 2016

The Public Company Accounting Oversight Board has adopted rules and amendments to auditing standards that require audit firms to use the new Form AP (Auditor Reporting of Certain Audit Participants) in which to name the engagement partner and other accounting firms that participated in an audit. The December 15, 2015 PCAOB vote to adopt marks the conclusion of a rulemaking initiative that began with a 2008 recommendation from the Treasury Department’s Advisory Committee on the Auditing Profession that engagement partners be required to sign their audit reports. In July 2009, the PCAOB took up the recommendation with a concept release and, most recently, the PCAOB requested comments on June 30, 2015. Having commented along the way, on August 25, 2015, NASBA Chair Walter Davenport and President Ken Bishop wrote that NASBA supported the supplemental request for use of Form AP: "We believe that the alternative presented would result in achieving the overall objective of transparency regarding participants in the audit, while at the same time providing easy access to such information and alleviating many of the practical issues, including those related to the need to obtain consents" (as previously outlined in NASBA’s January 24, 2014 letter to the PCAOB).

"The fact that the new disclosures will be consolidated in a database available on the PCAOB website means investors, analysts, audit committees and others can conduct meaningful comparisons," PCAOB Chairman James R. Doty stated at the rules’ adoption. "At the same time, this approach addresses firms’ concerns regarding liability consequences to their partners and other firms." In addressing an AICPA conference earlier in December, he explained the PCAOB had taken up the comments received in response to its June request which urged the PCAOB to develop a form for auditors to report the information other than in the audit report itself.

Mr. Doty announced at that AICPA conference, and PCAOB Chief Auditor and Director of Professional Standards Martin Baumann similarly announced at the Baruch College/NASBA Center for the Public Trust Annual Auditing Conference in December, the PCAOB expects to propose in early 2016 a new standard on auditor procedures for using the work of other auditors, and a proposal for an expanded audit report.

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