PCAOB seeking public comments on audit proposal

The Public Company Accounting Oversight Board (PCAOB) issued a proposal this week that is designed to improve audit quality and enhance investor protection.

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The proposal addresses aspects of designing and performing audit procedures that involve technology-assisted analysis of information in electronic form. More specifically, it includes changes to update aspects of AS 1105, Audit Evidence, and AS 2301, The Auditor’s Responses to the Risks of Material Misstatement.

“The use of technology by auditors and financial statement preparers never stops evolving, and PCAOB standards must keep up to fulfill our mission to protect investors,” PCAOB Chair Erica Williams said. “Today’s proposal is another key part of our strategic drive to modernize PCAOB standards.”

The PCAOB issued existing standards relating to audit evidence and responses to risk in 2010. However, PCAOB staff research indicates that audit quality would benefit if our standards included additional direction addressing specific aspects of designing and performing audit procedures that involve technology-assisted analysis.

This new proposal seeks to improve audit quality by reducing the likelihood that an auditor who uses technology-assisted analysis will issue an opinion without obtaining sufficient appropriate audit evidence. In particular, the proposal would bring greater clarity to auditor responsibilities in the following areas: using reliable information in audit procedures; using audit evidence for multiple purposes; and designing and performing substantive procedures.

The PCAOB is seeking public comment on the proposal by Aug. 28. The public can submit comments on the proposal at the Open for Public Comment page on its web site.

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors.