PCAOB Questions Its Own Relevance

The audit overseer is seeking help in identifying "the most promising opportunities to enhance the PCAOB's relevance to the capital markets."
Vincent RyanApril 25, 2018
PCAOB Questions Its Own Relevance

“Based on your interactions with, or monitoring of, the PCAOB, what is the most pressing constraint to the PCAOB’s relevance in the capital markets?”

That’s just one of the self-probing questions the Public Company Accounting Oversight Board is asking in a new online survey.

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The organization is conducting the survey as part of putting together a new, five-year strategic plan. The PCAOB is hoping to get the input of auditors, investors, financial statement preparers, audit committee members, and academics.

“With the appointment of five new board members, this is the right time to review [the PCAOB’s] progress, and identify what we are doing well and what we can do better,” said PCAOB Chairman William D. Duhnke.

“We have a responsibility to make sure we are fulfilling our mandate and providing careful stewardship of our resources.”

In the survey, the PCAOB asks for help in identifying “the most promising opportunities to enhance the PCAOB’s relevance to the capital markets.” It also asks, as noted above, what the “most pressing constraints” are to the PCAOB’s relevance.

William D. Duhnke

The answer choices to the second question include “its inspection approach and process,” “its standard-setting and research agendas,” and “its expertise in emerging technologies, such as artificial intelligence, machine learning, and other advanced analytics techniques employed in audits today.”

The survey also asks if, based on respondents’ experiences with the PCAOB, they believe the organization is improving the “value, quality, and relevance” of audits.

The survey comes at a time of uncertainty as to the PCAOB’s direction.

Duhnke, a Republican, will be overseeing the implementation of the first significant change to the standard form auditor’s report in more than 70 years.

The standard, agreed to last June when James Doty was still head of the PCAOB, requires auditors to include in the auditor’s report a discussion of the critical audit matters arising from an audit of an issuer’s financials.

The PCAOB also has yet to deal with a dispute with Chinese regulators “over whether PCAOB inspectors can access the records of audits Chinese accounting firms have conducted on Chinese companies listed in the United States,” according to Compliance Week.

In addition, there is lingering concern over the possibility of audit firms knowing beforehand which of their public company audits will face inspection by the PCAOB. That  arose from a revelation in mid-April that six auditors had improperly received advance information about upcoming inspections from an employee of the PCAOB.