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Deloitte comments on PCAOB's proposal related to the supervision of audits involving other auditors

Published on: Nov 20, 2017

Deloitte & Touche LLP comments on PCAOB Release No. 2017-005, Supplemental Request for 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.

An excerpt from the comment letter is shown below:

We support the Board’s efforts to enhance the standards of the PCAOB that address audits involving accounting firms and individual accountants outside the accounting firm that issues the auditor’s report and to align the applicable requirements with the PCAOB’s risk-based standards. These situations are becoming more and more prevalent as companies continue to expand their presence throughout this world. Similar to our response to request for comment on the 2016 Release, while we are supportive of the objectives of the Board, we have certain constructive suggestions. Specifically, we note that certain of the practical implementation challenges identified in our response to the 2016 Release (see Appendix B, Deloitte & Touche LLP’s Response to the 2016 Release) still exist, including:

• The ability to implement the limited criteria to serve as lead auditor in certain situations. Based on the group entity structure and domicile, as well as jurisdictional regulations related to auditor licensing, we believe there will be instances in which it would be difficult for any accounting firm to serve as the lead auditor, which creates a public interest challenge of having an audit performed.

• Expanded requirements related to the lead auditor obtaining an understanding of the other auditors’ independence and ethics, as well as policies and procedures related to training and assignment of individuals to audits. The practical challenges of implementation pose a very real risk for effective implementation of the requirements. Our experience suggests that centralization of such monitoring activities enhances audit quality both within an audit and within a firm.

Full text of the comment letter is available below.


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