The Public Company Accounting Oversight Board has updated its standard-setting agenda after undergoing criticism that it is not moving faster on releasing new standards.
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Other standards still seem to be in the discussion phase. Although the comment period on a reproposed version of a new standard for disclosure of the engagement partner and certain other participants in audits ended last March, the PCAOB staff is drafting for the board's consideration a supplemental request for comment that takes into account the comments that were received on the reproposal, including comments related to liability and an alternative location for the disclosure.
A proposed standard on revamping the auditor's reporting model was issued in August 2013, and the board held a public meeting in April 2014 to discuss the proposed standard and the comments it had received. The PCAOB said in the updated agenda that the staff is still analyzing the comments received on the proposal and at the public meeting and is drafting a reproposal for the board's consideration.
On other important matters, such as the auditor's evaluation of a company's ability to continue as a going concern, and how auditors should deal with specialists hired by companies to help with areas such as fair value measurements in financial statements, the staff anticipates that the PCAOB will issue a consultation paper in the first quarter of this year.
The PCAOB is still planning to turn its attention eventually to some long-delayed standards, such as for audit confirmations. On July 13, 2010, the board issued for public comment a proposed auditing standard on confirmation. The comment period ended on Sept. 13, 2010. The staff has analyzed the comments received and is planning to draft a reproposal for the board's consideration.
During a conference in Washington, D.C., last month hosted by the American Institute of CPAs, Securities and Exchange Commission chief accountant James Schnurr criticized the slow movement in standard-setting in recent years by the PCAOB. “Considering the lack of progress on a number of projects, I have questioned what might be the root cause or causes with respect to the PCAOB standard-setting process,” he said. “Accordingly, [PCAOB chairman] Jim Doty and I have discussed the need to work together with the other PCAOB board members to take a fresh look at the PCAOB’s standard-setting process with a focus on what improvements can be made to the timing of a project from inception to adoption of a standard or termination of a project. I am optimistic that working together the PCAOB can begin to reduce the significant standard-setting backlog.”
Doty spoke later in the day, and remarked, “Let me just say now that, as chief accountant Jim Schnurr said earlier this morning, we are looking closely at our standard-setting process to make sure it is as efficient and effective as possible. We want to make sure we have the full range of skillsets and data for the work we need to do. We have been reviewing our processes, especially in light of our goal to understand and analyze the economic impact of any potential rulemaking. This past summer's staff consultation paper on auditing estimates and fair value measures is an example of a new tool identified by this review.
“We will further expand the review of our processes in the upcoming year to identify efficiencies in the rulemaking process from staff level deliberation and drafting to board level review and decision-making,” Doty added. “Re-evaluating our processes, like any good organization does, is a constructive effort. We should issue new rules only after thoughtful assessment of the need to improve audit quality and evaluating the economic impact of any rule-making. But once we decide that any such improvement is appropriate, we want the organization, from staff to board, to be nimble in our execution.”
