The Development of Auditing Standards at the PCAOB and Related Audit Practitioner Input

2020 ◽  
Author(s):  
L. Tyler Williams ◽  
W. Mark Wilder
Keyword(s):  
Standard Setting ◽  
The Public ◽  
Setting Process ◽  
Public Company ◽  
Auditing Standards ◽  
Audit Standard ◽  
Comment Letters ◽  
Feedback Responses

The Public Company Accounting Oversight Board (PCAOB; Board) maintains that constituent feedback plays an essential and dynamic role in its audit standard-setting process. We examine a major source of constituent feedback, responses to standard-setting questions, using a sample drawn from the original proposals of fourteen PCAOB auditing standards. We find that after receiving comment letter feedback to the standard-setting questions, the Board revises approximately half of its guidance tied to those questions before it finalizes auditing standards-a finding consistent with the Board's assertion that it carefully considers constituent perspectives as it develops new regulation. We also explore the related comment letters of eight professional auditing firms subject to the PCAOB's annual inspection program and discover varying levels of opposition to and support for the PCAOB's proposed authoritative guidance. We observe PCAOB revision to authoritative guidance highly contested by the firms in more than three-fourths of cases of standard-setting questions and PCAOB non-revision to guidance highly supported by the firms in more than ninety percent of cases.

Going GAGAS for due process: examining Yellow Book standard participation

2020 ◽  
Vol 32 (2) ◽  
pp. 197-216
Author(s):  
Renee Flasher ◽  
Michelle Lau ◽  
Dara M. Marshall
Keyword(s):  
Federal Government ◽  
Due Process ◽  
Stakeholder Participation ◽  
Standard Setting ◽  
Content Type ◽  
Setting Process ◽  
The Us ◽  
Auditing Standards ◽  
Comment Letters ◽  
Government Auditing

PurposeThe US federal government requires auditors to follow governmental auditing standards when performing audits of entities expending significant federal government dollars. This study explores stakeholder participation during the comment letter phase of government auditing standard setting to determine if participation is symbolic or substantive.Design/methodology/approachResearchers conduct an analysis of the 179 comment letters submitted to the US Government Accountability Office (GAO) and received for their 2010 and 2017 exposure drafts of government auditing standards.FindingsThe distribution of stakeholder participation groups in the government auditing standard-setting process differs from the distribution in the private company auditing standard-setting process. On average, participants submit letters that are greater than two pages in length. Participants also contribute feedback on topics that the GAO directly solicits. Taken together, the results demonstrate stakeholder behaviors that are consistent with a substantive rather than symbolic due process involvement for government auditing standards.Research limitations/implicationsStakeholder beliefs are inferred based on the observed behavior of comment letter submissions. Also, there is a subjective element to the classification of the comment letters for the study.Practical ImplicationsGiven the far-reaching implications of Yellow Book auditing standards on public, private and nonprofit entities, the findings are relevant to a heterogeneous audience. This study reveals opportunities for users of government auditing standards, practitioners and academics for greater involvement in due process standard setting to bring additional legitimacy to the GAO and its standard-setting activities.Originality/valueBeyond the current study, little empirical research examines Yellow Book auditing standards or the due process through which these standards are established. This is the first study to examine the complete set of comment letters for the 2010 and 2017 exposure drafts of government auditing standards.

Economic Analysis of Proposed PCAOB Standards: Finding a Path Forward

2018 ◽  
Vol 32 (2) ◽  
pp. 183-200 ◽  
Author(s):  
Christine Nolder ◽  
Zoe-Vonna Palmrose
Keyword(s):  
Economic Analysis ◽  
Audit Quality ◽  
Standard Setting ◽  
Current Approach ◽  
Relevant Research ◽  
The Public ◽  
Setting Process ◽  
Public Company ◽  
Tailored Approach ◽  
The U.S

SYNOPSIS The pace of standard-setting by the Public Company Accounting Oversight Board (PCAOB) has been glacial, which increases the risk that U.S. auditing standards are not keeping up with the global audit environment. Legislation enacted in 2012 that created the need to conduct economic analysis of proposed PCAOB standards added important considerations. If appropriately integrated into the process, these considerations can improve PCAOB standard-setting. We describe the PCAOB's current approach to economic analysis and offer recommendations to improve the coherence, usefulness, and relevance of the evidence sought to justify the need for standard-setting. Our recommendations involve a tailored approach that (1) differentiates among types of PCAOB standards based on considering their overarching purpose and target audience; (2) recognizes appropriate theories that are unique to each type of standard—whether economic or other theories; and (3) develops audit-centric core principles focused on audit quality on which to ground the discussion of each proposed standard. We hope our commentary shifts thinking about the approach to economic analysis to improve PCAOB standard-setting, stimulates academic discussion of these and other important issues facing the standard-setting process in the U.S., and inspires relevant research that informs PCAOB standard-setting.

Acid-Causing Emission Standards in Alberta: The Standard-Setting Process, Enforcement and Forums

1985 ◽  
Vol 23 (1) ◽  
pp. 1
Author(s):  
Shelley N. Phillips ◽  
Gale L. Pretash
Keyword(s):  
Standard Setting ◽  
The Public ◽  
Public Input ◽  
Emission Standards ◽  
Setting Process ◽  
Scientific Analysis

The implementation and enforcement of standards regulating acid-causing emissions in Alberta are examined in this paper. Also addressed are the available forums for public input, the need for further scientific analysis and better communication between government, industry and the public.

Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the PCAOB Rulemaking Docket Matter No. 31: PCAOB Release No. 2010-005, Application of the “Failure to Supervise” Provision of the Sarbanes-Oxley Act of 2002 and Solicitation of Comment on Rulemaking Concepts

2011 ◽  
Vol 5 (1) ◽  
pp. C11-C15 ◽  
Author(s):  
Joseph Brazel ◽  
James Bierstaker ◽  
Paul Caster ◽  
Brad Reed
Keyword(s):  
Audit Quality ◽  
Exposure Period ◽  
Public Accounting ◽  
Accounting Firms ◽  
Accounting Firm ◽  
The Public ◽  
Sarbanes Oxley ◽  
Public Company ◽  
Auditing Standards ◽  
Supervision Practices

SUMMARY: Recently, the Public Company Accounting Oversight Board (“PCAOB” or “Board”) issued a release to address, in two ways, issues relating to the responsibilities of a registered public accounting firm and its supervisory personnel with respect to supervision. First, the release reminds registered firms and associated persons of, and highlights the scope of, Section 105(c)(6) of the Sarbanes-Oxley Act of 2002 (“the Act”), which authorizes the Board to impose sanctions on registered public accounting firms and their supervisory personnel for failing to supervise reasonably an associated person who has violated certain laws, rules, or standards. Second, the release discusses and seeks comment on conceptual approaches to rulemaking that might complement the application of Section 105(c)(6) and, through increased accountability, lead to improved supervision practices and, consequently, improved audit quality. The PCAOB provided for a 91-day exposure period (from August 5, 2010, to November 3, 2010) for interested parties to examine and provide comments on the conceptual approaches to rulemaking that might complement the application of Section 105(c)(6). The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided the comments in the letter below to the PCAOB on the PCAOB Release No. 2010-005, Application of the “Failure to Supervise” Provision of the Sarbanes-Oxley Act of 2002 and Solicitation of Comment on Rulemaking Concepts.

An Examination of Voting Behavior of the ASB

1994 ◽  
Vol 9 (1) ◽  
pp. 117-141 ◽  
Author(s):  
John E. McEnroe
Keyword(s):  
Voting Behavior ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Board Members ◽  
Financial Accounting Standards Board ◽  
Accounting Firms ◽  
Setting Process ◽  
Auditing Standards ◽  
Audit Standard ◽  
Parent Organizations

The system by which auditing standards are promulgated has resided in the private sector since 1939. The members of the Auditing Standards Boards (ASB), unlike the Financial Accounting Standards Board (FASB), retain formal affiliations with their parent organizations during their tenure on the ASB. As a result, this process has been criticized by the late Senator Metcalf and others. One of Metcalf s allegations was that large accounting firms dominate the audit standard-setting process through their employees that serve on the ASB. Accordingly, this study examines certain voting behavior of the ASB in an effort to determine if the board members are acting as agents of their parent organizations or, rather, as independent rule makers. The results do support the proposition that in casting certain votes, the board members are acting in an agency capacity.

scholarly journals Profiling Membership in the PCAOB's Standing Advisory Group

2019 ◽  
Vol 13 (1) ◽  
pp. A30-A41
Author(s):  
Kelsey Brasel ◽  
L. Tyler Williams
Keyword(s):  
Advisory Committee ◽  
Standard Setting ◽  
Descriptive Study ◽  
Data Availability ◽  
Professional Experience ◽  
Advisory Group ◽  
The Public ◽  
Advisory Boards ◽  
Public Company ◽  
Group Members

SUMMARY The Public Company Accounting Oversight Board (PCAOB) appoints an advisory group known as the Standing Advisory Group (SAG) to provide input on the relevance and appropriateness of its standard-setting agenda. Throughout the year, the PCAOB convenes meetings where the SAG opines on the direction of authoritative guidance on behalf of constituent groups. Our descriptive study provides an overview of the SAG's composition and role in standard-setting and succinctly describes the group members' professional experience since its inception in 2004. Specifically, we examine to what extent the PCAOB assembles the advisory group in consideration of the requirements of the Federal Advisory Committee Act of 1972 (FACA), which mandates appropriate constituent representation on governmental advisory boards. We find that although the PCAOB is not required to meet the requirements of the FACA, the SAG appears to represent an appropriate level and variety of professional experience consistent with other governmental advisory boards. Data Availability: Publicly available.

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the PCAOB Rulemaking Docket Matter 029: PCAOB Release No. 2011-007, Improving Transparency Through Disclosure of Engagement Partner and Certain Other Participants in Audits

2012 ◽  
Vol 6 (1) ◽  
pp. C1-C6 ◽  
Author(s):  
Keith L. Jones ◽  
Jagadison K. Aier ◽  
Duane M. Brandon ◽  
Tina D. Carpenter ◽  
Paul Caster ◽  
...  
Keyword(s):  
Exposure Period ◽  
Data Availability ◽  
Audit Report ◽  
Public Accounting ◽  
Accounting Firms ◽  
The Public ◽  
Public Comment ◽  
Public Company ◽  
Public Accounting Firms ◽  
Auditing Standards

SUMMARY In October 2011, the Public Company Accounting Oversight Board (PCAOB or Board) issued a release to solicit public comment on amendments to its standards that would improve the transparency of pubic company audits. The objective of the release was to solicit public comments on a proposed standard that would (1) require registered public accounting firms to disclose the name of the engagement partner in the audit report, (2) amend the Board's Annual Report Form to require registered firms to disclose the name of the engagement partner for each audit report already required to be reported on the form, and (3) require disclosure in the audit report of other independent public accounting firms and other persons that took part in the audit. The PCAOB provided for a 91-day exposure period (from October 11, 2011, to January 9, 2012) for interested parties to examine the release and provide comments. The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided the comments in the letter below to the PCAOB on PCAOB Rulemaking Docket Matter 029: PCAOB Release No. 2011-007, Improving Transparency Through Disclosure of Engagement Partner and Certain Other Participants in Audits. Data Availability: Information about and access to the release is available at: http://pcaobus.org/Rules/Rulemaking/Docket029/PCAOB_Release_2011-007.pdf

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Release No. 2013-009, Proposed Rule on Improving the Transparency of Audit: Proposed Amendments to PCAOB Auditing Standards to Provide Disclosure in the Auditor's Report of Certain Participants in the Audit

2014 ◽  
Vol 8 (2) ◽  
pp. C1-C7 ◽  
Author(s):  
Urton L. Anderson ◽  
Lisa Milici Gaynor ◽  
Karl E. Hackenbrack ◽  
Ling Lei Lisic ◽  
Yi-Jing Wu
Keyword(s):  
Data Availability ◽  
Public Accounting ◽  
Accounting Firms ◽  
The Public ◽  
Related Information ◽  
Public Company ◽  
Public Accounting Firms ◽  
Auditing Standards

SUMMARY On December 4, 2013 the Public Company Accounting Oversight Board (PCAOB) solicited public comments on its reproposed amendments to its standards that would improve the transparency of public company audits. The amendments would require (1) disclosure in the auditor's report of the name of the engagement partner, and (2) disclosure in the auditor's report of the names, locations, and extent of participation of other independent public accounting firms that took part in the audit and the locations and extent of participation of other persons not employed by the auditor that took part in the audit. The comment period initially ended on February 3, 2014, but was subsequently extended to March 17, 2014. This commentary summarizes the contributors' views on these amendments. Data Availability: The exposure drafts of the proposed and reproposed rules and related information are available at: http://pcaobus.org/Rules/Rulemaking/Pages/Docket029.aspx

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Rulemaking Docket Matter No. 37: PCAOB Release No. 2011-006, Concept Release on Auditor Independence and Audit Firm Rotation

2012 ◽  
Vol 6 (1) ◽  
pp. C15-C27 ◽  
Author(s):  
Keith L. Jones ◽  
Jagadison K. Aier ◽  
Duane M. Brandon ◽  
Tina D. Carpenter ◽  
Lisa M. Gaynor ◽  
...  
Keyword(s):  
Exposure Period ◽  
Auditor Independence ◽  
Data Availability ◽  
Professional Skepticism ◽  
Audit Firm ◽  
The Public ◽  
Public Comment ◽  
Public Company ◽  
Auditing Standards ◽  
Mandatory Audit Firm Rotation

SUMMARY In August 2011, the Public Company Accounting Oversight Board (PCAOB or Board) issued a concept release to solicit public comment on the potential direction of a proposed standard-setting project on means to enhance auditor independence, objectivity, and professional skepticism. The Concept Release sought comments on and explores in detail the possibility of mandatory audit firm rotation. The PCAOB provided for a 121-day exposure period (from August 16 to December 14, 2011) for interested parties to examine and provide comments on the concept release. The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided the comments in the letter below (dated December 13, 2011) to the PCAOB on PCAOB Rulemaking Docket Matter No. 37: PCAOB Release No. 2011-006, Concept Release on Auditor Independence and Audit Firm Rotation. Data Availability: Information about and access to the release are available at: http://pcaobus.org/Rules/Rulemaking/Docket037/Release_2011-006.pdf

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Release No. 2015-004, Supplemental Request for Comment: Rules to Require Disclosure of Certain Audit Participants on a New PCAOB Form

2015 ◽  
Vol 10 (1) ◽  
pp. C1-C10 ◽  
Author(s):  
Marcus M. Doxey ◽  
Marshall A. Geiger ◽  
Karl E. Hackenbrack ◽  
Sarah E. Stein
Keyword(s):  
Data Availability ◽  
The Public ◽  
Related Information ◽  
Audit Firms ◽  
Public Company ◽  
Auditing Standards ◽  
New Form

SUMMARY On June 30, 2015 the Public Company Accounting Oversight Board (PCAOB) issued a supplemental request for comment on its 2013 reproposal to require auditors to disclose in the auditor's report the name of the engagement partner and information about certain other participants in the audit. The supplemental request solicited public comments on an alternative to disclosure of this information in the auditor's report, namely that audit firms report (1) the name of the engagement partner, and (2) the names, locations, and extent of participation of other audit participants in a new form (Form AP) to be filed with the PCAOB within 30 days of the date the auditor's report is first included in a document filed with the SEC. The comment period ended on August 31, 2015. This commentary summarizes the participating committee members' views on the alternatives presented in the supplemental request for comment. Data Availability: The exposure drafts of the proposed and reproposed rules, the supplemental request for comment, and related information are available at: http://pcaobus.org/Rules/Rulemaking/Pages/Docket029.aspx

Sign in / Sign up

Export Citation Format

Share Document