UPDATED

The Public Company Accounting Oversight Board (PCAOB) has approved a measure that will require firms to disclose the name of the audit engagement partner as well as other firms that took part in the audit. 

Under the new measure, firms will disclose this information through a new form, Form AP. The audit firms will need to file this new form with the board in connection with each audit report. The data on the form will eventually be available on the PCAOB's website in a searchable database. It is the hope of the board that this new rule will increase transparency and accountability among audit firms. 

This was the third attempt by the board to have at least some public disclosure of specific audit participants: previous proposals, which ultimately failed to be implemented, included requiring the signature of the lead engagement partner on the audit report, to then just requiring the disclosure of the audit engagement partner name. Both times the board floated the idea, though, it was roundly criticized by the CPA community, including by the NYSSCPA. In a comment letter written in response to the proposal, the Society said that it felt that disclosing the name of the lead engagement partner would not provide any meaningful information, because “we believe it is highly unlikely that investors and other users of financial statements could be sufficiently familiar with the capabilities, integrity and ethical values of a significant portion of the hundreds or perhaps thousands of engagement partners responsible for the audit of public companies or the quality control environments in which they function in order to make any meaningful investment judgments concerning the audit.” 

The new rule will be effective for auditor's reports issued on or after January 31, 2017, or three months after SEC approval of the final rules, whichever is later. For disclosure of other audit firms participating in the audit, the requirement will be effective for reports issued on or after June 30, 2017.

"Auditing is a business about reputation," said James R. Doty, PCAOB Chairman. "Transparency about the partner and firms involved should further incentivize auditors to organize audit teams conscientiously to give investors comfort that it is reliable."