The PCAOB's newly released "2019 Staff Inspection Outlook for Audit Committees" provides sample questions for audit comittees to ask the external auditors in relation to each of the PCAOB's 2019 inspections cycle focus areas. The focus area topics - which are summarized in the new release - were initially identified and elaborated on in the PCAOB's "2019 Inspections Outlook" issued in December 2018 (reported on here: "2018 Audit Planning: PCAOB Inspections Outlook").
Audit committee chairs of "certain" companies whose audits are subject to inspection reportedly will be afforded an opportunity to engage with PCAOB inspections staff, with the stated aim of providing audit committees with "further insight" into the inspection process and eliciting their views. The PCAOB then expects to "publish additional updates" to audit committees regarding its inspections "to provide observations from these interviews and our inspection findings."
In response to this new PCAOB release, Stinson Leonard Street (including Partner Joel Schwartz, who was formerly the PCAOB's Assistant Director of Enforcement) cautions companies that are afforded the "opportunity" for engagement to carefully consider whether to partake due to the perceived inherent risks - which include engaging on inspection findings that may pose restatement and regulatory enforcement risks, as well as reputational risks for audit committee chairs and the company arising from how engagement "interviews" are reported by the PCAOB.
The firm further suggests companies establish a protocol for responding to a PCAOB inspection-related engagement request that encompasses, e.g., who will be informed, who will participate in the engagement and how, engagement preparation, the form and structure of engagement, and more.
See also this CFO.com article; these recent reports: "Audit Committee Agenda: PCAOB Inspection Reports," "PCAOB & SEC Audit & Audit Committee Insights," and "PCAOB Approves Strategic Plan & Budget"; and additional information & resources on our PCAOB and Audit Committees pages.
This post first appeared in the weekly Society Alert!