PCAOB withdraws rules on firm and engagement metrics, firm reporting

The Public Company Accounting Oversight Board has withdrawn the two standards it approved on firm and engagement metrics and firm reporting after they came under fire from auditing firms and companies.

The PCAOB voted to adopt the new standards last November, but they still needed to be approved by the Securities and Exchange Commission. They would have required firms to report extensive information about their partner and manager involvement in audits, workload, training hours, experience of audit personnel; retention, allocation of audit hours, restatement history, fees, governance, network relationships, cybersecurity and more. Groups such as the American Institute of CPAs and the Center for Audit Quality, along with auditing firms, sent comment letters to the SEC urging it to reject the new standards.

In a notice Tuesday, the SEC announced that the PCAOB withdrew the proposed rules on firm and engagement metrics and firm reporting. 

"The PCAOB looks forward to continuing to work with the Commission and all stakeholders to protect investors and increase transparency," a PCAOB spokesperson said in a statement, according to Bloomberg Law. 

The PCAOB made the decision to withdraw the firm reporting and firm and engagement metrics standards from consideration by the SEC after consultation with the SEC in order to continue working toward versions of both projects that can earn the support to be approved. Both of the projects remain on the PCAOB's agenda, however.  

The AICPA praised the move. "Among our concerns was the potential unintended consequence of the rules prompting small and midsized audit firms to stop performing public company audits, impacting companies that depend on those audit firms as they seek access to U.S. capital markets," said Sue Coffey, the AICPA's CEO of public accounting, in a statement, according to the Journal of Accountancy. "The PCAOB's decision not to move forward with the rules is the right one."