The agreement grants the PCAOB complete access to the audit work papers, audit personnel, and other information its needs to inspect and investigate any firm it chooses, with no loopholes and no exceptions.

The PCAOB Is currently finalizing preparations to be on the ground by mid-September so it can put this agreement to the test.

The Statement of Protocol specifically grants the PCAOB complete access in three important ways:

• The PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates – without consultation with, nor input from, Chinese authorities;
• Procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; and
• The PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.

Re­view the press release on the PCAOB’s web­site.

Modernizing standards is one of the four key goals the Board identified in its draft strategic plan. To meet that goal, earlier this year, the Board announced one of the most ambitious standard-setting agendas in PCAOB history, including plans to modernize interim standards that have not been updated since they were initially adopted decades ago.

Registered public accounting firms are sometimes engaged to examine and report on matters outside of an audit of financial statements. PCAOB attestation standards apply to attest engagements, which generally involve issuing a report on subject matter, or an assertion about subject matter, that is the responsibility of another party. For example, attest engagements may concern a company’s compliance with laws and regulations, or a company’s historical data or measures that are evaluated against certain criteria.

In April 2003, the Board adopted on an interim basis certain attestation standards from the American Institute of Certified Public Accountants. These standards have continued in effect substantially as they were adopted.

Review the press release and request for information on the PCAOB's website.

The new board announced its priorities via its updated standard-setting and research agendas. What’s not new? “Other Auditors” and “Quality Control” are still at the top of the list. Both projects have been active for some time. In addition, Data and Technology and Audit Evidence remain on the research agenda.
 
What’s new? The standard-setting agenda now has projects designated as “short-term” and “mid-term.” In addition to Other Auditors and Quality Control as noted above on the short-term list, the board has added:

• NOCLAR – This refers to Noncompliance with Laws and Regulations
• Attestations Standards
• Going Concern
• Confirmations

On the Mid-term list is:

• Substantive Analytical Procedures
• Fraud
• Interim Ethics and Independence Standards
• Interim Standards

What are interim standards? Upon inception of the PCAOB, all AICPA auditing standards were adopted on an “interim” basis. Many standards have since been updated by the PCAOB. There remains 28 interim auditing standards, 6 interim ethics and independence standards, and 6 attestation interim standards. Are they broken? Not necessarily. But standards should be continuously evaluated and modernized. Therefore, it seems a good effort to take stock of these interim standards.

Review the press release on the PCAOB's website.

Other Auditors Project Completed

In June 2022, the Board adopted amendments to its auditing standards to strengthen requirements that apply to audits involving multiple audit firms, thus completing a project initiated in 2016. With the SEC’s August 2022 approval of the Board’s action, the Other Auditors project has been removed from the standard-setting agenda.  

Three New Projects Added

The PCAOB further expanded its standard-setting and research agendas with three new projects.

Two of the new projects have been added to the short-term standard-setting agenda: Interim Standards – AS 1000 and Amendments Related to Certain Aspects of Designing and Performing Audit Procedures That Involve Technology-Assisted Data Analysis. The amendments related to certain aspects of the designing and performing technology-assisted data analysis project resulted from the successfully completed research project on Audit Evidence, which has now been removed.

One project has been added to the PCAOB’s research agenda: Firm and Engagement Performance Metrics.

Three Project Timelines Updated

The anticipated timing for the Confirmations project has moved up to 2022 from 2023, with the Board expected to issue a re-proposal before year’s end. 

For two projects — Noncompliance with Laws and Regulations and Attestation Standards Update — the anticipated timing for action is now 2023. Board action on these projects continues to be expected in the next 12 months.

Review the standard-setting and research agendas on the PCAOB's website.

The PCAOB’s updated standards make enhancements across two broad areas. First, the amended standards specify certain procedures for lead auditors to perform when supervising other auditors. Second, they require lead auditors to prioritize their supervisory activities around higher-risk areas in the audit.

Re­view the SEC’s press re­lease  on the SEC’s website and the PCAOB’s Release No. 2022-002, Planning and Supervision of Audits Involving Other Auditors and Dividing Responsibility for the Audit With Another Accounting Firm, on the PCAOB's web­site.

During this 12-month period, the IAASB approved the final revised standard on group audits, agreed its Work Plan for 2022-2023 that included a dedicated workstream on enhanced sustainability assurance standards, and developed and implemented its Framework for Activities, among other actions.

Review the press release and report on the IAASB's website.

In this publication, CPAB emphasizes the importance of culture to a firm’s system of quality management and provides preliminary observations on the implementation of the new quality management standards.

Review the publication on the CPAB's website.