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Ernst & Young

Rani Doyle

Managing Editor, Securities Law
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PCAOB Adopts New Standards for Auditor Responsibilities and Quality Control

By Thomas W. White, Retired Partner, WilmerHale

In its current strategic plan, the Public Company Accounting Oversight Board (PCAOB) identified modernization of auditing and other professional standards for public company auditors—many of which predate formation of the PCAOB in 2003—as a key goal. On May 13, the PCAOB advanced this objective with the adoption of two comprehensively revised standards.

The PCAOB adopted a new auditing standard, AS 1000, General Responsibilities of the Auditor in Conducting an Audit, and amended related standards. AS 1000 revises and consolidates several standards that address the general principles and responsibilities of the auditor, such as due professional care, professional skepticism, and professional judgment. According to the PCAOB, the new standards will:

  • Modernize, clarify, and streamline the general principles and responsibilities of auditors and provide a more logical presentation (but without creating new principles or responsibilities)
  • Clarify the auditor’s responsibility to evaluate whether the financial statements are “presented fairly” (but without changing existing responsibilities to conduct this evaluation in conformity with the existing the applicable accounting framework, e.g., GAAP)
  • Clarify the engagement partner’s due professional care responsibilities by adding specificity to certain audit performance principles set out in the standards
  • Accelerate the completion date for the auditor’s audit documentation from forty-five days to fourteen days (thereby enabling the PCAOB to speed up its inspection process)
  • Clarify that an auditor’s professional skepticism extends to other information that is obtained to comply with PCAOB standards and rules

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