PCAOB proposal would expand auditors' responsibilities
Hot Topic | July 2023
Proposed amendments would require auditors to identify a company鈥檚 noncompliance with laws and regulations.
We summarize the amendments to auditing standards proposed by the Public Company Accounting Oversight Board (PCAOB) that would require auditors to identify a company鈥檚 noncompliance with laws and regulations. We鈥檝e summarized significant changes and potential impacts for both auditors and management.
Applicability
- Public companies
Relevant dates
- June 6, 2023 鈥� The PCAOB released proposal
- August 7, 2023 鈥� Comments due
Key impacts
The PCAOB is seeking public comment on extensive changes proposed to auditing standards related to auditors鈥� responsibilities over a company鈥檚 noncompliance with laws and regulations (NOCLAR), including:
- identifying laws and regulations with which noncompliance could reasonably have a material effect on the financial statements
- assessing the risks of material misstatement of the financial statements due to noncompliance with those laws and regulations, and responding appropriately
- identifying whether there are instances of NOCLAR that have or may have occurred
- evaluating those NOCLAR instances and communicating to appropriate parties, regardless of perceived materiality
Report contents
- Introduction
- Summary of significant changes and potential impacts
- Amendments to other PCAOB auditing standards
- Potential impacts to management
- Economic analysis
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PCAOB proposal
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