In his latest "Audit Committee and Auditor Oversight Update" article on the PCAOB's recent release of two Big 4 inspection reports, Society member and recently retired Baker McKenzie partner (also former SEC General Counsel and former PCAOB founding member & Acting Chair) Dan Goelzer imparts this seasoned, sound advice for audit committees about how to use the information in their company's audit firm PCAOB inspection reports to inform the engagement going forward:
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Audit committees should discuss the results of their audit firm’s most recent PCAOB inspection with their engagement partner. If the company’s audit is mentioned in either the public or nonpublic portion of the inspection report, the audit committee should understand the reasons for the reference to the audit and how it will affect the engagement in the future. If the company’s audit is not cited in the report, the audit committee should explore with the auditor how deficiencies identified in other audits might have affected the company’s audit and how changes in the firm’s procedures might affect future audits. Audit committees should also understand how the firm intends to remediate quality control deficiencies described in the nonpublic portion of the report.
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