The Public Company Accounting Oversight Board updated its standard-setting, research and rulemaking agendas Tuesday to reflect recent progress on modernizing the PCAOB's older standards and rules.
Since 2022, the PCAOB noted that it has completed four standard-setting projects and issued proposals on six more standard-setting and rulemaking projects. On Monday, the PCAOB completed two of its projects, approving standards on quality control and the general responsibilities of the auditing in conducting an audit, although they still have to be approved by the Securities and Exchange Commission. The quality control standard received an opposing vote from board member Christina Ho, who expressed a desire for commenters and the SEC to weigh in against it. The PCAOB is already facing opposition on its NOCLAR standard for auditors to look for signs of noncompliance with laws and regulations.
In the meantime, though, the PCAOB added two projects to its short-term standard-setting agenda: Inventory, which moved over from the mid-term standard-setting agenda, and Other Reporting, a new project on the short-term agenda.
Another new project has now been added to the mid-term agenda, on internal audit. This could provoke some pushback from other groups, such as the Institute of Internal Auditors, which recently updated its own Global Internal Audit Standards in January. The PCAOB said this project would update one of its older standards, AS 2605, Consideration of the Internal Audit Function, in connection with the Interim Standards project to reflect changes in the auditing and reporting environment.
The PCAOB also updated the anticipated timeline for one project, the Attestation Standards Update, which is now slated for 2025.
In addition, the PCAOB has now removed one project from its agenda, on Follow-On Disciplinary Proceedings, which is surprising considering the tougher stance that the PCAOB and the SEC have been taking with audit firms, most recently with the SEC's permanent suspension of BF Borgers, a small Colorado firm that was accused of fabricating audit documentation and had been previously kicked out of the AICPA's peer review program.
The PCAOB has been in the process of updating many of the older standards it inherited from the American Institute of CPAs after the Sarbanes-Oxley Act of 2002 led to the establishment of the PCAOB back in 2003. SEC chairman Gary Gensler appointed Erica Williams to chair the board and has encouraged her to spearhead this effort. With the November election approaching and a potential change in the White House, getting the standards overhaul done has become more of a priority in case the next administration takes a more deregulatory approach.
