Increasing the value of the auditor’s report – Oversight board considers changes

Description

Abstract: The Public Company Accounting Oversight Board (PCAOB) is exploring ways to increase the value of the auditor’s report to investors and other financial statement users. It recently issued a proposal that would require auditors to report “critical audit matters,” evaluate certain information outside the financial statements and offer information about auditor tenure. However, commenters have registered concerns regarding audit scope expansion, breach of confidentiality, investor confusion and legal liability. This article discusses these issues and notes that, whatever the final standards look like, they’ll have a huge impact on financial reporting and may affect a company’s ability to raise capital. A sidebar looks at whether there’s a correlation between audit tenure and audit quality.