The Public Company Accounting Oversight Board (PCAOB) reached out to the audit committee chairs (ACCs) of most of the U.S. public companies whose audits they inspected during 2020 and offered them the opportunity to speak with the inspection teams. In total, they spoke to nearly 300 audit committee chairs. As discussed in our December DHG Board Report, the Financial Reporting Council in the UK conducted a similar sensing exercise with ACCs focused on audit quality. Together, they provide great insight into the thinking of ACCs.
The PCAOB report can be found here.
Here are a few highlights from the PCAOB report:
- ACCs identified areas for improvement including managing global audit operations, helping junior audit members learn the company’s business, communications regarding independence, guidance around audit certain controls for third-party vendors, over auditing and/or over documentation and increases visibility into discussion around fee changes.
- ACCs had overwhelmingly positive feedback on the new PCAOB report format.
- ACCs identified areas that are working well including:
- Asking external auditors to provide constructive feedback and recommendations for the internal audit team
- Asking the audit firm for training for new audit committee members
- Reviewing year-over-year PCAOB inspection report trends within and between audit firms
- Over 75% of ACCs had not discussed the new requirements around accounting estimates and use of specialist with their auditors.
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