Companies and their auditors are getting ready for the Public Company Accounting Oversight Board’s new audit reporting model, despite uncertainty over whether the Securities and Exchange Commission will approve the new standard.
The PCAOB voted for the new standard in June after years of work and a series of proposals that attracted extensive industry feedback (see PCAOB makes major changes to auditor’s report). The SEC has not yet approved the standard, although it typically has rubberstamped any new rules approved by the PCAOB. In this case, however, the U.S. Chamber of Commerce has lined up 27 major corporations and business groups in urging the SEC to reject it (see Business groups object to new audit standard). They argue that the discussion of so-called “critical audit matters,” or CAMs, that the new standard would require in audit reports could “result in the disclosure of immaterial information, replace management as the source of original information, create a chilling effect on the audit committee—auditor relationship, create liability for businesses and auditors, and impose additional expenses on firms.”
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