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March 22, 2011

PCAOB to overhaul auditor reports

The US Public Company Accounting Oversight Board (PCAOB) will make changes to the auditor’s reporting model following its research which found that investors want more risk disclosure and greater transparency.

PCAOB chairman James Doty said investors have shown dissatisfaction with the current auditor’s report model, which will now be reviewed by the regulator and re-published in the next few months.

“This report from our own staff, based on their discussions with a broad audience, will be vital to the board’s effort to develop a meaningful proposal for change in a concept release. Our intention is to expose such a release as early as this summer,” Doty said.

PCAOB chief auditor Martin Baumann said the research found investors need to hear more from the auditor about the risks the auditors faced in the audit and about the judgments and estimates management has made in the financial statements.

The PCAOB research was carried out by the office of the chief auditor (OCA) based on work with investors, auditors, preparers of financial statements, audit committee members.

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