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  • Writer's pictureDaniel Goelzer

PCAOB Updates its Agenda and Sets its Sights on Internal Audit

Updated: Jun 11

The staff of the PCAOB has announced updates to the Board’s standard-setting, research, and rulemaking agendas.  The Board removed two projects completed in May from the standard-setting agenda – Quality Control and General Responsibilities of the Auditor in Conducting an Audit.  See PCAOB Adopts Enhanced Quality Control Standards for Audit Firms and PCAOB Reworks the Foundations of Auditing.  A new project on the auditor’s consideration and use of a client’s internal audit function has been added to the mid-term standard-setting agenda.  The updated agendas indicate that the PCAOB intends to move forward with several important initiatives during the second half of 2024, including a final standard on auditor consideration of client noncompliance with laws and regulations. The prior version of the PCAOB agendas is discussed in PCAOB Updates its Agendas and Adds a CAMs Review, November-December 2023 Update.

 

Standard-setting projects that could have an impact on audit committees include:

 

 

  • Critical Audit Matters (CAMs).  The Board’s research agenda includes a project on CAMs.  This project “seeks to understand why there continues to be a decrease in the average number of . . . [CAMs] reported in the auditor’s report over time and whether there is a need for guidance, changes to PCAOB standards, or other regulatory action to improve such reporting, including the information that is provided as part of the CAM reporting.”  See PCAOB Updates its Agendas and Adds a CAMs Review, above.  Projects on the research agenda do not have specific time schedules.

 

  • Firm and Engagement Performance Metrics.  On April 9, the PCAOB issued for comment two proposals that would expand the disclosures accounting firms must make regarding their performance of audit engagements and their operational and financial condition.  See PCAOB Proposes Engagement Metrics and Audit Firm Operational and Financial Reporting, April 2024 Update.  The engagement metrics proposal would require firms that audit large public companies to report eleven metrics relating to specific audit engagements or to the firm’s overall audit practice.  This project is on the short-term standard-setting agenda, although the next anticipated action is “TBD pending analysis of comment letters.”

 

  • Internal Audit.  The staff added a new project on internal audit to the mid-term standard-setting agenda.  This project will consider updates to AS 2605, Consideration of the Internal Audit Function.  AS 2605 provides guidance to auditors on considering the work of internal auditors and on using internal auditors to provide direct assistance in performing an audit.  This project has no specific timeline.

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