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PCAOB adopts new auditing standards and releases proposal on auditing accounting estimates

The Public Company Accounting Oversight Board (PCAOB) has adopted new auditing standards and has released a proposal for consultation on auditing accounting estimates.

The new standards require auditors to include in the auditor's report a discussion of the critical audit matters, which are matters that have been communicated to the audit committee. These are related to accounts or disclosures that are material to the financial statements, and involve especially challenging, subjective, or complex auditor judgment. 

Under the new standard, the auditor's report will disclose, among other things, the tenure of an auditor, specifically, the year in which the auditor began serving consecutively as the company's auditor.

PCAOB chairman James Doty said: "The changes adopted today breathe life into the audit report and give investors the information they've been asking for from auditors. The USA also now joins many other countries in adopting an expanded audit report."

Earlier this month, the PCAOB issued for public comment a proposal to enhance the requirements that apply when auditing accounting estimates, including fair value measurements.

The proposal emphasises that auditors need to practice professional scepticism and pay more attention to potential bias when they audit accounting estimates.

The deadline for comment is 30 August; the proposal can be accessed here

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