The Public Company Accounting Oversight Board
(PCAOB) has issued a document for audit committees detailing its
inspection process and the meaning of reported inspection
The PCAOB said the main aim of the document is
to help better equip audit committees of public company boards of
directors to engage in meaningful discussion with PCAOB-registered
audit firms about the results of inspections.
The document provides information about the
meaning and significance of PCAOB inspection findings in the
context of both engagement reviews and quality control
reviews. It also suggests some specific approaches that an
audit committee might consider for initiating or enhancing
inspection-related discussions with an audit firm.
PCAOB chairman James Doty said the document
has been issued in part because of concerns audit committee members
have expressed about “how to understand what their auditors say
about inspection results”.
The document also highlights certain areas of
inquiry that audit committees may wish to address with their
auditors. For example:
- whether the audit overseen by
the audit committee was selected by the PCAOB for an
inspection and whether any findings were made;
- potentially relevant
inspection findings on other audits performed by the firm;
- the firm’s response
to PCAOB findings; and,
- the firm’s remedial
efforts in light of any quality control deficiencies that may have
been identified by the PCAOB.