The Public Company Accounting Oversight Board unveiled far-reaching proposals this week for enhancing the auditor’s reporting model in what could be the biggest transformation of the audit report in over 70 years.

Whereas many audit reports nowadays are full of boilerplate language and essentially take a pass/fail kind of approach to opining on whether a company’s financial statements are in accordance with U.S. GAAP, the new auditor’s reporting model envisioned by the PCAOB could potentially provide much more useful information to investors (see PCAOB Proposes to Change Auditor’s Reporting Model). On the other hand, it would also place a much greater burden on the auditor and the auditing firm, perhaps exposing them even more than they already are to the threat of litigation from investors, not to mention the ire of their clients.

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