CAQ asks PCAOB to delay standards

The Center for Audit Quality wants the Public Company Accounting Oversight Board to postpone sending two of its newly approved standards, on quality control and auditor responsibilities, to the Securities and Exchange Commission for final approval, while also requesting a longer comment period for two proposed standards, on firm and engagement metrics along with firm reporting.

Last week, the PCAOB approved new standards on a firm's system of quality control and the general responsibilities of the auditor in conducting an audit, although one of the board members voted against the QC standard, pointing to the potentially high costs of compliance for small and medium size firms. The proposed standards on firm and engagement metrics and firm reporting emerged last month, and could impose significant new reporting requirements on firms of all sizes. 

In a comment letter sent to the PCAOB Wednesday, the CAQ asked the PCAOB to extend the comment period for its firm engagement metrics and firm reporting proposals and recommended the PCAOB delay sending the 19b-4 filing to the SEC on the QC 1000 quality control and AS 1000 auditor responsibility standards by at least 45 days. If the form has already been filed, the CAQ has asked the PCAOB to withdraw and resubmit it in 45 days to allow more time to review and consider the complex proposals and standards. 

Courtesy of the Center for Audit Quality

"As an organization dedicated to supporting and enhancing audit quality, we have been and continue to be supportive of the PCAOB's strategic priorities, including their goal to modernize standards," said the comment letter. "The CAQ has the privilege of observing firsthand our member firms' continued commitment to audit quality, and it is through that lens that we request this extension. An extension in the due date for comment letters will enable commenters to carefully consider the proposed requirements, including the impact of the final requirements included in recently adopted standards, and share thoughtful recommendations that will help the PCAOB finalize their standards and rules with requirements that have increased potential to improve audit quality while minimizing unintended  consequences."

The CAQ pointed out that it has previously shared its support for the PCAOB's commitment to stakeholder engagement across its strategic goals. "One way to demonstrate the Board's commitment to stakeholder engagement with respect to standard-setting would be to extend the due date for comments on these proposals," said the comment letter.

Last year, the CAQ organized a letter-writing campaign to object to an earlier proposal from the PCAOB on noncompliance with laws and regulations, or NOCLAR, which has continued to attract opposition.

When asked about the CAQ's initial reactions to the new proposals and standards, spokesperson Julia Germain responded, "I can say that we continue to be supportive of the PCAOB's strategic priorities, including their modernization of standards. However, we won't be able to comment until we've reviewed these proposals in full."