More time, more risk and more expense—this is what auditors expect will be the effect of a recent Public Company Accounting Oversight Board (PCAOB) measure expanding the standard auditor’s report. Under the rule, formally approved by the board on June 1, the standard auditor’s report will include, among other things, the communication of “critical audit matters (CAM),” or information that the PCAOB believes investors and other users would find relevant.

A bill (S6026A/A7895A) that would require mandatory peer review for all CPA firms in New York state that do attest work was passed in the Senate and Assembly in June and now requires only Gov. Andrew Cuomo’s signature to become law.  The Society advocated for passage of the act, which eliminates an exemption from mandatory peer review for firms with two or fewer CPAs, in order to protect the public interest by ensuring best practices among all CPA firms that perform audits. 

Signed into law 15 years ago, on July 30, 2002, the Sarbanes-Oxley Act (SOX) transformed the public accounting arena in significant ways. From mandatory internal controls testing to regular inspections from the Public Company Accounting Oversight Board, SOX introduced changes that today are seen as the standard features of any worthwhile audit. But now, a decade and a half later, lawmakers and business leaders have questioned the legacy of these changes and, indeed, are seeking to roll some of them back. 

Major accounting firms have been moving away from traditional tax and audit services and into consulting and advisory services to boost earnings. In recent years, consulting has become a significant source of revenue for some firms. For Steven B. Harris, a member of the Public Company Accounting Oversight Board (PCAOB), a well-documented shift from audit services toward consulting services for revenue raises concerns about auditor independence.