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  • Writer's pictureDaniel Goelzer

No Surprises, Please. 2022 PCAOB Conversations with Audit Committee Chairs

Updated: Oct 24, 2023

Audit committee chairs are worried about the impact of the “great resignation” on their engagement team and on the financial reporting staff at their company. And they don’t like inconsistent or last-minute auditor communications which could lead to surprises during the audit. Those are two of the conclusions that can be drawn from the Public Company Accounting Oversight Board (PCAOB) annual report on its inspection staff’s discussions with audit committee chairs.


Each year, the PCAOB invites the audit committee chairs of the U.S. public companies it has selected for inspection to participate in “unstructured, substantive conversations in an informal setting” with the staff of the Division of Registration and Inspections. In 2022, 211 audit committee chairs accepted this invitation; 85 percent of these chairs had not previously participated in dialogue with the PCAOB inspections staff. Spotlight: 2022 Conversations with Audit Committee Chairs (2022 Conversations Report) summarizes these discussions. This is the fourth year the PCAOB has published the results of the inspection staff’s interactions with audit committee chairs. For last year’s report, see The PCAOB Reports on its 2021 Conversations with Audit Committee Chairs, March 2022 Update.


The 2022 Conversations Report discusses five recurring themes that emerged from these conversations:

  • Staffing. Concern about the impact of turnover (the “great resignation”) on both financial reporting and auditing was a frequent theme. Audit committee chairs noted that both the number of CPAs at the issuer responsible for financial reporting and the level engagement team staffing and experience may have impacted audit efficiency.

  • Covid-19. Most audit committee chairs did not believe the pandemic had significantly impacted their audit. However, many thought that an audit performed in a remote or hybrid environment presents elevated risk, particularly regarding controls and cybersecurity, and requires heightened supervision and review. On the positive side, some noted that remote and hybrid auditing resulted in more frequent communications between the auditor and the audit committee.

  • Communications. Audit committee chairs value early, ongoing, and proactive communication with their auditors. Many interviewees felt that their auditor was meeting these expectations. However, several complained of “inconsistent or last-minute communication” and would like to see improvement to “minimize the possibility of surprises throughout the audit.”

  • Critical Audit Matters. For the past several years, auditors have been required to discuss critical audit matters (CAMs) in the audit report. (CAMs are challenging or judgmental aspects of the audit that were discussed with the audit committee.) Audit committee chairs were generally pleased with their auditor’s preparation for CAMs-related discussions and did not cite significant disagreements over what should be included as a CAM in the auditor’s report. However, “a small percentage of audit committee chairs questioned whether CAMs reporting is becoming a generic compliance exercise, sometimes resulting in ‘boilerplate’ language provided by the auditor.”

  • Information Outside the Financial Statements. The PCAOB staff asked audit committee chairs whether they were discussing with their auditor information outside of the financial statements, such as non-GAAP financial measures. While the use of non-GAAP measures varies from industry to industry, ensuring the accuracy of any non-GAAP information disclosed was of “almost universal importance” to audit committee chairs. In addition, many chairs indicated that they are discussing with their auditor financial statement, internal control, and assurance implications of potential climate-related disclosure requirements. (As discussed in prior Updates, the SEC’s climate disclosure proposals would both impact the content of the financial statements and require independent attestation of greenhouse gas disclosures outside the financial statements.)

Comment: The 2022 Conversations Report provides insight as to the current views and concerns of audit committee chairs. In addition, an audit committee chair who is contacted by the PCAOB inspection staff as part of an inspection of the company’s auditor may want to review the 2022 Conversations Report and prior reports on these dialogues as a way of preparing for the interview.

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