The Public Company Accounting Oversight Board (PCAOB) has issued a document for audit committees detailing its inspection process and the meaning of reported inspection results.
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.