PCAOB Adopts New Rules for Audit Reports

The Public Company Accounting Oversight Board (PCAOB) has adopted new rules and amendments to auditing standards (collectively, the “proposed rules”) to make the auditor’s report more informative and relevant to investors and other financial statement users. The text of the proposed rules appears in Exhibit A to the SEC Filing Form 19b-4 and is available on the Board’s website.

Additionally, the PCAOB  Board has adopted a phased approach to the effective dates for the new requirements to provide accounting firms, companies, and audit committees more time to prepare for implementation of the critical audit matter requirements, which are expected to require more effort to implement than the additional improvements to the auditor’s report.

All provisions other than those related to critical audit matters will take effect for audits of fiscal years ending on or after December 15, 2017; and Provisions related to critical audit matters will take effect for audits of fiscal years ending on or after June 30, 2019, for large accelerated filers; and for fiscal years ending on or after December 15, 2020, for all other companies to which the requirements apply.  Notwithstanding the above, Auditors may elect to comply before the effective date, at any point after SEC approval of the final standard.