New PCAOB Auditor Disclosure Guidelines

The Public Company Accounting Oversight Board (PCAOB) recently released staff guidance to help firms implement the new rule requiring them to name those who took part in an audit along with specific details about the participants. Under new PCAOB regulations, auditors are expected to disclose the name of the audit engagement partner as well as other firms that participated in the public company audit. These rules were created to increase transparency and accountability among audit firms so that investors and others will be able to evaluate audit quality by knowledge about who is leading and participating in audits. To help clients, prospects and others understand the implication of these rules; JLK Rosenberger has provided a summary of the new guidance below.

Under the new rules, auditors will be required to file a new PCAOB Form AP, Auditor Reporting of Certain Audit Participants, for all public company audits. The following information must be disclosed on the form:

  • Name of the engagement partner and their “Partner ID” (a unique ten-digit identifier that will now need to be assigned by the firm to each partner who serves as engagement partner for issuer audits) and any Partner ID previously associated with the engagement partner.
  • Legal names, headquarter locations, firm ID if applicable, and extent of participation of other accounting firms, persons, or entities that took part in the audit if their work constituted 5% or more of the total audit hours.
  • Number and aggregate extent of participation of all other accounting firms, persons, or entities that took part in the audit whose individual participation was less than 5% of the total audit hours.

Firms will need to start naming engagement partners on the new Form AP, which is available now on the PCAOB website, starting with audits issued on or after Jan. 31, 2017. Other audit partners must be named on the form with the required additional information for public company audits issued on or after June 30, 2017.

Form AP must be filed directly with the PCAOB no more than 35 days after the audit firm files their report with the SEC. For initial public offerings, Form AP must be filed no later than 10 days after the auditor’s report is first included in any document filed with the SEC.

Additional Guidance

The PCAOB staff guidance document provides information on how to correctly complete and file Form AP along with an example form and covers other provisions of the recently enacted rules. For instance, guidance for what to do when a partner changes their name or if the firm divides responsibility for the audit with another public accounting firm is included.

PCAOB plans to hold conference calls later this year to discuss the use of technology in submitting Form AP. Firms will also have an opportunity to conduct test runs of Form APs submitted using the web form and XML.

Contact Us

The new regulations will have an impact on the SEC Filing process. If you have a questions about the new requirement and how it will impact your filing process, JLK Rosenberger is here to help! For additional information, call us at (949) 860-9902 or click here for email. We look forward to speaking with you soon!

 

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