SEC Approves PCAOB Rules on Naming Audit Partners

By:
Chris Gaetano
Published Date:
May 10, 2016
NameTagThe Securities and Exchange Commission has approved rules from the Public Company Accounting Oversight Board that will require audit firms to name the audit engagement partners, as well as information about other firms that participate in the audits. They will do so through a new form, Form AP, that will be filed directly with the PCAOB starting in 2017. Firms will need to identify the engagement partner on the form starting January of that year, and will need to start listing other firms that took part in the audit in June of that year. The information on the form will be publicly available through a searchable database. The board voted in favor of the final rule in December, but needed the SEC, which oversees the PCAOB, to make the final approval. 

"Auditing is a profession built on reputation, and one important way investors can assess the quality of an audit is to know who conducted that audit," said PCAOB Chairman James R. Doty. "Form AP will provide that important information to investors."

Publicly identifying the lead audit engagement partner has been a longtime priority for the PCAOB, having tried and failed to implement such a measure twice before. The first time was in 2011, when it proposed requiring that the engagement partner name, as well as information about other audit participants, be listed in the audit report itself, but it failed to gain traction. Then, in 2013, the board issued a revised proposal that relaxed some of the disclosed requirements but maintained the core principle that the lead audit engagement partner and other audit participants be identified in the audit report. 

Both times, however, critics—including the NYSSCPA—expressed skepticism that there would be any benefit to either investors or users. In an Aug. 31 comment letter on the now-approved proposal, the Society said it was still opposed to the idea, as it felt the information disclosed on the form not only wouldn’t be very useful, but “has the potential to mislead the public by providing it with the misconception that the engagement partner is responsible for the audit, rather than the public accounting firm.”

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