I am providing a link (see below) to a PCAOB release reporting that the PCAOB has sanctioned five audit firms for their audit committee communications. I have also provided below a partial snapshot of the PCAOB release. The sanction amounts are relatively small. And there is a fix – I am sure that remedies are already in place. Auditor independence is an important disclosure and an important requirement as the outside auditor must be “independent” as described in the PCAOB rules and standards, and AICPA auditing pronouncements.
Of course there are also other additional more detailed audit-related communications that the auditor is required to have with the audit committee and/or other people who are in charge of governance. When I was an audit committee chair I would also ask the audit partner if there are any other items that the auditor is aware of that they believe the audit committee members should know? See also, for example, PCAOB AS 1301: Communications with Audit Committees and PCAOB AS 1305: Communications About Control Deficiencies in an Audit of Financial Statements.
Please see also my prior posts discussing CAMs, NOCLARs, and the proposed new PCAOB standard relating to auditing standards and communications pertaining to possible or actual noncompliance with laws and regulations, in addition to other auditing standards and pronouncements that might present challenging situations and from which additional or different auditor/audit committee communications might arise, such as the following: PCAOB AS 2401: Consideration of Fraud in a Financial Statement Audit; PCAOB AS 2405: Illegal Acts by Clients; PCAOB AS 2410: Related Parties; PCAOB AS 2415: Consideration of an Entity’s Ability to Continue as a Going Concern; PCAOB AS 2501: Auditing Accounting Estimates, Including Fair Value Measurements; PCAOB AS 2505: Inquiry of a Client’s Lawyer Concerning Litigation, Claims, and Assessments; PCAOB AS 2510: Auditing Inventories; PCAOB AS 2605: Consideration of the Internal Audit Function; and PCAOB AS 2710: Other Information in Documents Containing Audited Financial Statements.
Below is a partial snapshot of the PCAOB release, and here is the link to the release: https://pcaobus.org/news-events/news-releases/news-release-detail/following-sweep-pcaob-sanctions-five-firms-for-violating-pcaob-rules-and-standards-related-to-audit-committee-communications
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Thank you for viewing this discussion. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved. If you are interested in discussing anything that I have said in the discussion above or in either of my two blogs (see blog addresses below), or if you simply want to reach out or are seeking assistance, it is best to reach me by email at dave@tateattorney.com.
David Tate, Esq. (and inactive CPA)
- Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
- Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
- Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
- Mediator and facilitating dispute resolution (evaluative and facilitative):
- Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
- Business, breach of contract/commercial, owner, shareholder, investor, etc.
- D&O, board, audit and governance committee, accountant and CPA related.
- Other: workplace and employment, environmental, trade secret.
Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.
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My two blogs are:
http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com
Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com
David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.
David Tate, Esq. Headlines (and inactive CPA) – Trust, estate, probate and elder abuse disputes, litigation and contentious administrations; business litigation and internal and co-owner business disputes, litigation, and governance; real property and co-owner disputes and litigation; mediator and dispute resolution services; and social and digital media for law, people, businesses and legal risk management. 