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Objective

Consider changes to auditing standards to modernize and clarify principles and responsibilities fundamental to the conduct of an audit.

Most Recent Action

Adopted a new standard, AS 1000, General Responsibilities of the Auditor in Conducting an Audit, together with related amendments to other PCAOB auditing standards. 

In brief, the Board’s new standard and related amendments:

  • Reorganize and consolidate standards that address the general principles and responsibilities of the auditor to reflect changes in the auditing environment, eliminate outdated and inconsistent language, and increase consistency throughout PCAOB standards.
  • Include introductory language that reaffirms the auditor’s fundamental obligation to protect investors through the preparation and issuance of informative, accurate, and independent auditor’s reports;
  • Retain and clarify the general principles and responsibilities that are important for an audit, including reasonable assurance, due professional care, professional skepticism, and professional judgment;
  • Align the engagement partner’s existing supervisory responsibilities with due professional care;
  • Retain the requirement for the auditor to be independent but express the obligation more directly by referring to the PCAOB’s independence criteria in its rules and standards, and the independence criteria set out in the rules and regulations of the SEC;
  • Describe the auditor’s obligations to (i) comply with ethics requirements, (ii) obtain and maintain competence, and (iii) prepare audit documentation;
  • Clarify the engagement partner’s existing responsibilities for supervision and review to provide more specificity about the engagement partner’s responsibility to exercise due professional care related to supervisory and review activities;
  • Clarify the requirements for audit documentation to identify who performed the work, who reviewed the work, and the date of such review;
  • Clarify the meaning of “presents fairly” and streamline the requirements to provide a more logical presentation; and
  • Accelerate the period for the auditor to assemble a complete and final set of audit documentation for retention from 45 days to 14 days.

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Background

The auditing standards that are superseded by the new standard and related amendments are:

  • AS 1001, Responsibilities and Functions of the Independent Auditor;
  • AS 1005, Independence;
  • AS 1010, Training and Proficiency of the Independent Auditor;
  • AS 1015, Due Professional Care in the Performance of Work; and
  • AS 2815, The Meaning of "Present Fairly in Conformity with Generally Accepted Accounting Principles"
These standards were in effect substantially in the form adopted by the Board on an interim basis in 2003. The general principles in these standards (e.g., due professional care and professional skepticism) remain sound, and the new standard and related amendments modernize, clarify, and streamline the principles and responsibilities of the auditor in conducting an audit, and enhance the usability of the standards by making them easier to read, understand, and apply.
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Status

On May 13, 2024, the PCAOB adopted a new standard, AS 1000, General Responsibilities of the Auditor in Conducting an Audit, and related amendments to other PCAOB standards.

Subject to approval by the U.S. Securities and Exchange Commission, the new standard and related amendments will take effect for audits of financial statements for fiscal years beginning on or after December 15, 2024, except that, for registered public accounting firms that provide audit opinions for 100 or fewer issuers, the amendment relating to the documentation completion date will take effect for audits of financial statements for fiscal years beginning on or after December 15, 2025.

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