PCAOB Proposes Rule Covering Audit Standards in Circumstances of Noncompliance

The Public Company Accounting Oversight Board (PCAOB) recently proposed changes to auditing standards related to auditors’ responsibilities over a company’s noncompliance with certain laws and regulations. The proposal, entitled “Amendments to PCAOB Auditing Standards related to a Company’s Noncompliance with Laws and Regulations” would require, in part, that auditors identify potential areas of the law where noncompliance would impact financial statements, assess risk of material misstatement on financial statements due to noncompliance, and identifying instances where noncompliance may have occurred, among other changes. The PCAOB received over 200 comment letters from industry participants stating the proposal is too broad, would increase audit costs, and expand the scope of the auditors’ role to include legal analysis.

Click here to read the PCAOB’s rule proposal “Amendments to PCAOB Auditing Standards related to a Company’s Noncompliance with Laws and Regulations.”
Click here to read a client alert from Gibson Dunn on the proposal.