PCAOB Adopts Rules Requiring Disclosure of Engagement Partner Name and Other Audit Participants in New Form | Practical Law

PCAOB Adopts Rules Requiring Disclosure of Engagement Partner Name and Other Audit Participants in New Form | Practical Law

On December 15, 2015, the Public Company Accounting Oversight Board (PCAOB) adopted new rules and amendments to its auditing standards that will require disclosure of the name of the audit engagement partner and information about other independent accounting firms that participated in the audit in a new PCAOB form.

PCAOB Adopts Rules Requiring Disclosure of Engagement Partner Name and Other Audit Participants in New Form

by Practical Law Corporate & Securities
Published on 16 Dec 2015 • USA (National/Federal)
On December 15, 2015, the Public Company Accounting Oversight Board (PCAOB) adopted new rules and amendments to its auditing standards that will require disclosure of the name of the audit engagement partner and information about other independent accounting firms that participated in the audit in a new PCAOB form.
On December 15, 2015, the Public Company Accounting Oversight Board (PCAOB) adopted new rules and amendments to its auditing standards that will require registered accounting firms to file a new PCAOB form, Form AP - Auditor Reporting of Certain Auditor Participants, for each completed issuer audit, disclosing:
  • The name of the engagement partner who led the audit for the most recent period.
  • The names, locations and extent of participation (as a percentage of the total audit hours) of other public accounting firms that took part in the audit if their work exceeded 5% of total audit hours.
  • The number and aggregate extent of participation of all other accounting firms that took part in the audit whose individual participation was less than 5 percent of the total audit hours.
A Form AP will be due within 35 days after an audit report is first included in a document filed with the SEC or, in the case of an initial public offering, within 10 days after the audit report is first included in the registration statement filed with the SEC. Completed Form AP filings will be available on the PCAOB’s website in a database searchable by the general public. Form AP requirements will not apply to audits of brokers and dealers under Rule 17a-5 under the Exchange Act, unless the broker or dealer is a reporting company.
Auditors will also be permitted to disclose some or all of this information voluntarily in their audit reports. However, this voluntary disclosure will not eliminate the requirement to provide this information in, and file, a Form AP.
As described in a press release, the purpose of the new rules and form is to increase transparency of public company audits by providing investors with information about certain key participants in the audit.
Subject to SEC approval, the disclosure requirement for the engagement partner will take effect for audit reports issued on or after January 31, 2017, or three months after SEC approval of the final rules, whichever is later. The disclosure requirement for other audit firms participating in the audit will take effect, if approved by the SEC, for reports issued on or after June 30, 2017. If approved, the SEC will also determine whether the new requirements will apply to audits of emerging growth companies (EGCs). The PCAOB recommends that the new requirements apply to EGC audits.
Update: On January 29, 2016, the PCAOB filed the proposed rules and amendments with the SEC. The SEC is accepting comments until March 8, 2016.
Update: On May 9, 2016, the SEC approved the proposed rules and amendments.