The Texas Society of CPAs’ Professional Standards Committee has sent a comment letter to the Public Company Accounting Oversight Board taking issue with the PCAOB’s proposed requirement for the lead auditor to sign off on an audit.
The PCAOB’s proposal would require registered public accounting firms to disclose the name of the engagement partner in an audit report, amend the board’s annual report form to require registered firms to disclose the engagement partner for each report already required to be reported on the form, and require disclosure in the audit report of independent public accounting firms and other persons who took part in the audit.
The TSCPA’s Professional Standards Committee, however, said it believes the exposure draft, which poses numerous questions for review, is flawed, misguided, and is being proposed to correct inadequacies of those responsible for audit engagements by identifying them and publicizing a perceived perception of inappropriate or inadequate performance.
In addition, the committee said it believes the proposed amendments would lead the public to think that a majority of audit partners in charge of audit engagements are inept or unconcerned with their professional responsibilities.
“We believe this [exposure draft] has many flaws in both the basis for its issuance and the guidance it proposes,” said the letter, signed by Kathryn W. Kapka, who chairs the TSCPA’s Professional Standards Committee. “The justification for this document appears to come from the views of the Council of Institutional Investors and inconclusive research provided by the academic community. The focus of the document seems to be on rectifying the inadequacies of those in charge of audit engagements by identifying them and publicizing the perception of their inappropriate performance. We believe this is a very poor basis for the development of an auditing standard!”
She cited several safeguards within the profession to keep such situations from occurring. The comment letter questioned whether the PCAOB feels such efforts have failed to accomplish their goals and objectives.
The committee contended that any radical changes to the current audit report disclosures would result in widespread confusion. The proposed disclosures would generate many questions and concerns on the part of users and lead to numerous misunderstandings that could negatively affect the decisions users make as a result of their interpretations of these disclosures, according to the TSCPA committee.
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