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Audit & Assurance Update — PCAOB issues proposal for audits involving other auditors

Published on: Apr 29, 2016

This Audit & Assurance Update addresses the key provisions of the PCAOB’s proposed amendments to its auditing standards to strengthen requirements that apply to audits involving accounting firms and individual accountants that are not part of the accounting firm that issues the auditor’s report (i.e., “other auditors”). The amendments are designed to improve the quality of audits involving other auditors and to align with the PCAOB’s risk-based standards through:

  • Considering recent changes that firms have implemented to improve their auditing practices.
  • Applying a risk-based approach to supervision that would direct the lead auditor's supervisory responsibilities to the areas of greatest risk.
  • Providing additional direction to the lead auditor on how to apply the principles-based supervisory requirements to assure that its participation in the audit is sufficient for it to carry out its responsibilities and issue an audit report based on sufficient appropriate evidence.

To implement these changes, the PCAOB is proposing to:

  • Amend existing requirements, including Auditing Standard (AS) 1201 (Supervision), AS 2101 (Planning), AS 1215 (Documentation), and AS 1220 (Engagement Quality Review).
  • Define the terms "engagement team," "lead auditor," "other auditor," and "referred-to auditor."
  • Supersede AS 1205 (Part of the Audit Performed by Other Independent Auditors) and thus eliminate the ability of auditors to use the work and reports of other auditors under the requirements of that standard (and therefore the lead auditor would be required to supervise other auditors under AS 1201 when assuming responsibility for the other auditor's work).
  • Develop a new auditing standard for an audit in which the lead auditor divides responsibility for the audit with another accounting firm and refers to the audit report of the other firm in the lead auditor's own audit report.


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