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Deloitte comments on PCAOB's proposal on the use of the work of specialists

Published on: Sep 08, 2017

Deloitte & Touche LLP comments on the PCAOB's "Proposed Amendments to Auditing Standards for Auditor's Use of the Work of Specialists," which were issued in June 2017.

An excerpt from the comment letter is shown below:

We support the Board’s efforts to enhance the standards of the PCAOB relating to the auditor’s use of the work of a specialist. We acknowledge and appreciate the PCAOB staff’s efforts in this area to date, including their commitment to seek further input through the issuance of the Proposal. We commend the PCAOB Staff and Board Members for devoting a significant portion of the June 1, 2017, Open Board Meeting to Consider Adopting Standard on the Auditor’s Report, and Proposing Updated Requirements for Auditing Accounting Estimates and an Auditor’s Use of the Work of Specialists to discussing matters relevant to the Proposal. 

In addition, we believe that the PCAOB’s efforts in considering amendments to the standards addressing use of the work of a specialist along with the Estimates Proposal is thoughtful and appropriate. These concurrent proposals allow commenters to better evaluate and analyze the effect of such proposed amendments, both individually and collectively, and for the PCAOB to consider the feedback collectively as well. We continue to believe it will be important that any resulting amendments pertaining to these two proposals become effective at the same time. In addition, we recommend the effective date should provide auditors with a period of at least two years from the time the standard is approved by the SEC, as we believe there could be significant efforts for accounting firms and specialists engaged by auditors to undertake in order to properly prepare to implement these requirements.

We agree with the proposed distinctions among the work of a company’s specialist, an auditor’s employed specialist, and an auditor’s engaged specialist and the related organization of the proposed amendments within the separate auditing standards for Audit Evidence, Supervision of the Audit Engagement, and Using the Work of an Auditor-Engaged Specialist. These distinctions and resulting organization within the auditing standards provide the basis for a better understanding by the auditor of the requirements for each type of specialist based on how that specialist is used in the context of the audit and also provides the ability to compare and contrast the requirements for each type of specialist across the standards. 

We are very supportive of the design of the proposed amendments to align the applicable requirements with the PCAOB’s risk assessment standards. The application of a risk-based approach to the testing and evaluation of a company’s specialist’s work and the supervision of an auditor’s specialist will reduce the risk of the auditor failing to sufficiently and appropriately address identified risks of material misstatement and will also avoid unnecessary effort by the auditor and the auditor’s specialist. 

For more information, see the full text of the comment letter which is available below.

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