PCAOB Adopts New Requirements for Lead Auditor’s Use of Other Auditors

The Public Company Accounting Oversight Board (PCAOB) today adopted amendments to its auditing standards to strengthen requirements that apply to audits involving multiple audit firms. The amendments, which benefited from three comment solicitations, aim to improve the quality of audits where other accounting firms or individual accountants perform important work on the audit.

“Today, after an extensive process of analysis and public input regarding the lead auditor’s use of other auditors, the Board is taking action to improve audit quality and strengthen investor protection,” said PCAOB Chair Erica Y. Williams. “These amendments will require audit firms to ensure that lead auditors sufficiently plan, supervise, and evaluate the work of other auditors.”

Working with other auditors can differ from working with people in the same firm, creating challenges in coordination and communication. These challenges can lead to misunderstandings about the nature, timing, and extent of the other auditors’ work and can reduce audit quality.

To address such situations, the amendments, which include changes to existing standards and adoption of a new standard, improve PCAOB standards principally by:

• Specifying certain procedures for the lead auditor to perform when planning and supervising an audit that involves other auditors; and
• Applying a risk-based supervisory approach to the lead auditor’s oversight of other auditors for whose work the lead auditor assumes responsibility.

“The Board thanks the many commenters who provided thoughtful input on how the PCAOB can improve the quality of audits involving other auditors,” added Chair Williams. “We look forward to monitoring the implementation and impact of these improvements to our standards as we evaluate whether our objectives in this area are fulfilled.”

The amendments apply to all audits conducted under PCAOB standards. Subject to approval by the Securities and Exchange Commission, the amendments will take effect for audits of financial statements for fiscal years ending on or after December 15, 2024.

More on the history of this project, including historical documents and comments received, can be found in Rulemaking Docket 042 and the related Standard-Setting Project page. For more information regarding the PCAOB’s standard-setting activity, visit our Standards page.

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About the PCAOB

The PCAOB is a nonprofit corporation established by Congress to oversee the audits of public companies in order to protect investors and further the public interest in the preparation of informative, accurate, and independent audit reports. The PCAOB also oversees the audits of brokers and dealers, including compliance reports filed pursuant to federal securities laws.

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