State Board Report
Changes to the Public Company Accounting Oversight Board’s inspection program are under consideration, PCAOB Board Member Jeanette M. Franzel, told a May 5 meeting at Baruch College. She explained that since the PCAOB began its operations in 2003, it has been refining and evolving its approach to overseeing the audits of public companies. She recalled that some PCAOB members had said it had been in "regulator adolescence," and now Ms. Franzel believes it has emerged from that stage.
"One potential change the PCAOB is exploring is selecting audits for inspection on a broader basis than the current risk-based selection approach (potentially random selections)," she stated. "Increasing the selection of audits or audit areas outside the risk-based selection approach could help us assess firms’ compliance with standards in the types of audit and areas that PCAOB inspections have not focused on in the past. This may provide information about how firms’ quality control systems are operating across a wider span of issuer audits."
Another potential change would involve more focus on testing of a firm’s quality control system. Ms. Franzel explained: "Currently, inspection staff assess whether a firm has weaknesses in its quality control system based on the number and types of deficiencies identified in individual audits, combined with the results of testing certain aspects of the quality control system." This change in focus could decrease the number of audits inspected.
Through March 2016, the PCAOB made publicly available quality control criticisms from 235 inspection reports, including some from each of the largest audit firms. However, Ms. Franzel said she was "encouraged by the progress I’ve seen in the remediation efforts in many of the largest firms and the corresponding improvements in quality control." As for the smaller firms, she observed "…progress is more nuanced and challenging to gauge across the board…"
- MEMBER CENTER
- Board Member Portal
- Member Products & Services
- Legislative Support
- Board Gateway Access
- PROC Resources
- Enforcement Tools
- NASBA Awards
- ED Login
- Meetings & Events
- CPA Exam Credit Extension
- NTS Extensions
- Continuous Testing Overview and Status Map
- CPA Exam
- International Qualification Examination (IQEX)
- CPA Australia
- Chartered Accountants Australia and New Zealand (CAANZ)
- Instituto Mexicano de Contadores Publicos (IMCP)
- Hong Kong Institute of Certified Public Accountants (HKICPA)
- Institute of Chartered Accountants of Scotland (ICAS)
- South African Institute of Chartered Accountants (SAICA)
- Chartered Accountants Ireland (CAI)
- CPA Canada (CPAC)
- NASBA International Evaluation Services
- Exam News
- Products and Services