PCAOB shares insights from audit committee leaders

The Public Company Accounting Oversight Board staff released a new publication highlighting the perspectives of audit committee chairs.

The publication, “2024 Conversations With Audit Committee Chairs,” includes observations and takeaways from 272 interviews that PCAOB staff conducted with audit committee chairs last year. The topics include factors affecting their relationships with the audit firm, the economic environment impacting the audit, and the use of emerging technologies in auditing. Over three-quarters (78%) of them had never previously spoken with the PCAOB. Interacting with audit committee chairs offers important viewpoints for PCAOB staff to consider in planning inspection activities.

The publication includes answers to questions that audit committee chairs frequently raise in their conversations with the PCAOB, such as:

• How are audits selected for review?
• What does an inspection entail?
• Does the PCAOB have educational training or events for audit committee members?

Generally, the audit committee chairs of public companies audited by non-affiliated firms spent more time discussing significant transactions, fraud risks and the related procedures to address the risk of fraud, and matters related to internal controls, while the audit committee chairs of public companies audited by global network firms spent more time on independence and accounting issues.
“Most of the audit committee chairs interviewed review the PCAOB’s latest firm inspection report of their auditor and other information publicly available on the PCAOB website when determining whether to reappoint the auditor,” said the report. “Audit committee discussions with their auditors centered around key findings in the inspection reports and measures taken by the audit firms to address those findings. Certain audit committee chairs indicated that the inspection findings are typically summarized by the auditors for discussion with the audit committee. When the audit committee was considering changing audit firms, the audit committee chairs indicated that the findings in the reports were particularly important.”

The release of the staff publication comes as the PCAOB faces the prospect of having its responsibilities transferred to the Securities and Exchange Commission next year if Congress passes a bill that was recently approved by the House Financial Services Committee.