New PCAOB project is modernizing interim auditing standards
The Public Company Accounting Oversight Board (PCAOB) is currently undertaking a project to update its “interim” standards that were first adopted in 2003. These placeholder standards were originally based on American Institute of Certified Public Accountants (AICPA) generally accepted audit and other attest standards, as well as standards related to ethics and independence. Since 2003, some “interim” standards have been either updated or replaced by the PCAOB. However, many of the “interim” standards continue to be substantially unchanged from their original form upon initial adoption by the PCAOB.
Modernizing standards is one of the four key goals in the PCAOB’s draft strategic plan. The objective of the project is to review the remaining “interim” standards to determine whether they continue to be fit for use within the PCAOB mandate of investor protection. Existing standards may be retained, amended, replaced or eliminated as deemed appropriate. Requests for public comment will be made as the PCAOB staff completes its analysis and makes changes or suggestions for elimination.
There are a variety of reasons why the original standards may require update, revision or elimination, including the following:
- Subsequent improvements to requirements for risk assessment, documentation and reporting.
- Alignment of registered public accounting firm methodologies with a higher quality risk-based audit approach.
- Implementation of an integrated audit concept to satisfy the requirements of Sarbanes-Oxley.
- Technology advancements related to either financial reporting or auditing.
- Activities of other relevant standard-setters and regulators.
Updates may range from minor updates to major changes. If concepts have been incorporated into another standard for more logical presentation, it may be discovered that a particular standard is no longer necessary to retain at all.
PCAOB staff are currently developing recommendations and will share more details as phases of analysis are completed.