PCAOB Gives Firms Relief from Inspections in Response to Coronavirus

Chris Gaetano
Published Date:
Mar 24, 2020
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Audit firms won't need to worry about inspections from the Public Company Accounting Oversight Board (PCAOB) for at least the next 45 days, according to a recent announcement. The board noted that it has been reflecting on how it will fulfill two dual mandates: one, ensure the health and safety of its employees and those with whom they interact, and, two, carry out its statutory mission to promote audit quality, which includes inspections.

"In balancing these considerations, we have made the decision to provide PCAOB-registered audit firms an up to 45-day relief period from inspections, with the exception of providing us access to audit documentation for certain engagements,"  said the board. "Audit firms that wish to avail themselves of the 45-day relief period in full or in part should reach out to their designated inspections point of contact. We expect to fully resume inspections beginning May 11, 2020."

This, said the board, will hopefully give audit firms enough time to work through significant matters with their issuer and broker-dealer clients while, at the same time, allowing PCAOB staff (who are working remotely) to continue their important work by reviewing documentation for certain engagements remotely and preparing for inspections.

The PCAOB is one of a number of regulators that have offered various relief measures in response to the coronavirus epidemic. The Securities and Exchange Commission has offered numerous relief measures to investment companies, transfer companies, board members and investment advisers, as well as certain publicly traded companies. The Commodities Futures Trading Commission has released similar relief for brokers, exchanges, and execution facilities. The Financial Industry Regulatory Authority, as well, has extended regulatory relief to those in the securities industry.

The Financial Accounting Standards Board (FASB), meanwhile, is under significant pressure to delay implementation of the new current expected credit loss (CECL) standard in the wake of significant credit crunches caused by the virus. American Banker reports that the head of the Federal Deposit Insurance Corporation (FDIC) asked the board to push the implementation date back to at least 2023, joining lawmakers who have introduced legislation seeking the same thing, as well as the trade group representing credit unions. The FASB, for its part, has resisted such calls to delay the standard, which has technically been in effect since Jan. 1, saying such an accounting change is not the right way to combat the coronavirus.

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