On May 16, the Public Company Accounting Oversight Board announced that its staff had posted to the Board’s website a revised standard-setting agenda. The Board describes its standard-setting agenda as “primarily focused on enhancing investor protection by prioritizing the areas where improvements to PCAOB standards could have the most significant impact on audit quality and the public interest.” From an audit committee perspective, the most significant change from the prior agenda is that a project entitled “Firm and Engagement Performance Metrics” has been added to the short-term agenda. The short-term list consists of those standard-setting projects where a Board action (e.g., proposal or adoption) is anticipated in fewer than 12 months.
The Firm and Engagement Performance Metrics project is based on a 2008 recommendation of the Department of the Treasury’s Advisory Committee on the Auditing Profession that the PCAOB, in consultation with auditors, investors, public companies, audit committees, boards of directors, academics, and others, determine the feasibility of developing key indicators of audit quality and effectiveness. In 2015, the PCAOB issued a Concept Release on Audit Quality Indicators and sought comment on 28 potential indicators. See PCAOB Publishes Concept Release on Audit Quality Indicators, July 2015 Update. The PCAOB has taken no further action on audit quality indicators since publication of the concept release.
PCAOB audit quality indicators could be useful to audit committees in assessing the performance of their auditor. Audit committees may want to follow the progress of the project as it evolves.