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PCAOB issues proposal on auditor supervision

  • PCAOB document (green) Image

Apr 13, 2016

The PCAOB has issued a proposal for public comment, “Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard — Dividing Responsibility for the Audit With Another Accounting Firm.”

The proposal aims to “strengthen existing requirements and impose a more uniform approach to a lead auditor's supervision of other auditors.” It would significantly change guidance on this topic by (1) superseding two auditing standards; (2) amending four auditing standards; and (3) creating a new auditing standard, AS 1260, Dividing Responsibility for the Audit With Another Accounting Firm. The new standard would require the lead auditor to disclose in its audit report which portion of the financial statements was audited by each other auditor. It also requires the lead auditor to:

  • “Obtain a representation from each other auditor that the other auditor is duly licensed to practice under the applicable laws of the relevant country or jurisdiction.
  • Determine whether each other auditor that would play a substantial role in the preparation or furnishing of the lead auditor's report is, or is required to be, registered with the PCAOB.
  • Disclose the name of the other auditor in the lead auditor's report.”

Comments on the proposal are due by July 29, 2016. For more information, see the proposal, press release, and fact sheet on the PCAOB’s Web site.

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