The continuing focus on lessons learned from the global financial crisis has prompted the Public Company Accounting Oversight Board (PCAOB) to release two landmark proposals designed to address longstanding criticisms of auditor reporting.
As critics grew more vocal in the aftershocks of the severe economic upheaval and unexpected business failures of 2008 and 2009, the PCAOB responded with a multi-year study of the pros and cons of various potential changes.
Today’s proposals have been years in the making, and they pave the way for the first major changes in decades in the content of the audit reports issued by independent auditors of public companies.
The PCAOB has combined its proposed changes to auditor reporting into a single release known as PCAOB Release No. 2013-05 dated August 13, 2013 (the Release). This nearly 300-page release weaves together two sets of proposed audit standards and related amendments. One set of proposals aims to provide more useful information for investors by prescribing specific kinds of additional information that auditors would be required to include in their reports about audits of financial statements. The other set seeks to broaden the auditor’s involvement with supplemental or “other” information that is provided in annual reports that include the audited financial statements.
The latest Messenger from Mayer Hoffman McCann P.C. summarizes the proposals, expected benefits, and open questions. In addition, the appendix on page 5 shows an example of how audit reports might look in the future.