Home > Uncategorized > PCAOB Advice to Audit Committees re Auditor Inspection Scores – But Does it Matter?

PCAOB Advice to Audit Committees re Auditor Inspection Scores – But Does it Matter?

August 10, 2012

The PCAOB states:

“The Public Company Accounting Oversight Board (“PCAOB or the “Board”) is issuing this document to assist audit committees in (1) understanding the PCAOB’s inspections of their audit firms and (2) gathering useful information from their audit firms about those inspections. Some audit committees have told the Board that their audit firms provide helpful information to them about their inspection, but others have said that their auditors decline to discuss their PCAOB inspection results with them or downplay the results of any adverse findings that may be included in the report.”  Click Here for the full text of the PCAOB’s advice to audit committees.

But I have to wonder, what will result from the PCAOB’s advice that an audit committee should expect their auditor to provide information about the score or comments that the auditor received from the PCAOB?  Does the PCAOB with its advice now create an audit committee standard of care or standard of action that the audit committee ask its auditor or prospective auditor to provide the results of its PCAOB inspection, and that the audit committee not retain the auditor if the auditor refuses?  I would say not – at least not at this point, but possibly moving in that direction.  Frankly, I am surprised that any auditor would refuse to provide the requested information.  But then again, the audit committee does have the authority to retain or not retain the services of the auditor.  It should be an easy decision.

Then again, here is another issue about which director organizations (NACD?) can provide leadership.

If you are a director, or an audit committee member, what are you going to do?

Dave Tate, Esq. (San Francisco)

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