On December 17, 2019, the Public Company Accounting Oversight Board (PCAOB) voted to issue a concept release on a potential approach to revisit the PCAOB’s quality control (QC) standard. The original standard was adopted in 2003, and there have been significant changes to the auditing environment since this time.
The PCAOB’s consideration for revisiting the standard stems from the following: (1) observations from its oversight committee, (2) information gathered through outreach efforts, (3) relevant academic research and literature, and (4) developments and trends in the internal control environment, enterprise risk management, corporate governance, and audit firm governance.
The PCAOB is considering using Internal Standard on Quality Management (ISQM) 1 as the starting point for the future QC standard which is designed to focus firms’ attention on proactively identifying and responding to quality risks that may affect engagement quality. The PCAOB also noted that many firms who follow the PCAOB standards are also subject to other QC standards and, so those firms are currently required to implement a QC system to comply with both. This new standard would help to align the standards to be more consistent.
The PCAOB requests comments on the concept release by March 16, 2020. Check out the Concept Release (2019-003) for further information.
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