PCAOB Offers Firms Advice on Fixing Audit Quality Problems
The Public Company Accounting Oversight Board has added a page to its Web site to provide information to audit firms where quality control problems have been found.
The document aims to provide information to firms that receive a final inspection report that includes any criticism of the firm's system of quality control. Any such criticism is nonpublic when the report is issued, but it will remain nonpublic only if the firm addresses the criticism to the board's satisfaction no later than 12 months from the date of the report, the PCAOB noted.
The PCAOB is encouraging all firms to initiate a dialogue with the inspections staff early in the 12-month remediation period, develop draft remediation plans that describe how a firm intends to address the quality control criticisms, and share those plans with the inspections staff. The PCAOB pointed out that it provides the opportunity for a dialogue between the inspections staff and the firm so that a firm can receive timely, constructive feedback regarding its proposed efforts for each quality control criticism before the 12-month deadline.
The PCAOB said its experience has shown that, the earlier in the 12-month period that the firm initiates such a dialogue, the better it will be able, based on inspections staff feedback, to adjust its approach, if necessary, to achieve a positive staff recommendation.