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Academia plays a key role in shaping the future of the profession by developing the next generation of financial reporting professionals and conducting essential research and analysis. The CAQ works to strengthen the connection between practice and academia by identifying and supporting research relevant to practice and assurance policies and standards. Additionally, The CAQ provides tools and training resources to assist current and future auditors.

In an effort to engage capital market stakeholders and better understand their information expectations, the CAQ commissioned KRC Research to conduct qualitative research with institutional investors whose portfolio consists primarily of equities in North America, working in a range of...

In an effort to engage capital market stakeholders and better understand their information expectations, the CAQ commissioned KRC Research to conduct qualitative research with institutional investors whose portfolio consists primarily of equities in North America, working in a range of investment settings from family offices to pensions and large banks.

The research was primarily designed to:
<ul>
 	<li>Understand what information institutional investors seek regarding public company auditing and the audit process, and</li>
 	<li>Explore attitudes toward potential standards and regulations related to additional reporting or audit requirements.</li>
</ul>
This research was also commissioned to understand how institutional investors perceive the state of corporate reporting and what they are looking for when it comes to existing and emerging types and sources of information.

<a href="https://thecaqprod.wpenginepowered.com/wp-content/uploads/2023/11/caq_perspectives-on-corporate-reporting-the-audit-and-regulatory-environment_2023-11.pdf">Download the full report</a> now to explore perspectives of institutional investors, who utilize the work of public company auditors, on corporate reporting, audit quality, and potential standard setting topics.

Perspectives on Corporate Reporting, the Audit, and Regulatory Environment: Institutional Investor Research Findings

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On March 28, 2023, the Board issued for public comment a proposal for a new standard, AS 1000, General Responsibilities of the Auditor in Conducting an Audit. Comment letters were due May 30, 2023.

The PCAOB received 28 comment letters, with...

On March 28, 2023, the Board issued for public comment a proposal for a new standard, <a href="https://assets.pcaobus.org/pcaob-dev/docs/default-source/rulemaking/docket-049/pcaob-release-no.-2023-001-as-1000---proposed.pdf?sfvrsn=28304d26_2">AS 1000, General Responsibilities of the Auditor in Conducting an Audit</a>. Comment letters were due May 30, 2023.

The PCAOB received 28 comment letters, with more than half from accounting firms and related groups.
<h4>Who responded?</h4>
<img class="wp-image-14163 alignnone" src="https://thecaqprod.wpenginepowered.com/wp-content/uploads/2023/11/2023_11_AS-1000_Chart-1024x317.png" alt="AS 1000 Responses" width="800" height="248" />

In our analysis of comment letters received, key themes are:
<ol>
 	<li>The proposal expands the auditor’s responsibilities despite the Board’s statement that the amendments were clarifications of existing standards.</li>
 	<li>The proposal eliminates key concepts and principles from the extant standards</li>
 	<li>The proposal creates confusion about the auditor’s role and will have other unintended consequences</li>
 	<li>Accounting firms and related groups, among other commenters, oppose the clarification of the meaning of fair presentation and state it is important that the auditor’s evaluation of the presentation of the financial statements be applied within the applicable financial reporting framework.</li>
</ol>
For more details, read our full analysis <a href="https://thecaqprod.wpenginepowered.com/wp-content/uploads/2023/11/caq_comment-letter-analysis-as-1000_2023-11.pdf">here</a>.

Comment Letter Analysis | CAQ Analysis of PCAOB Proposed Auditing Standard – General Responsibilities of the Auditor in Conducting an Audit and Proposed Amendments to PCAOB Standards (AS 1000)

Comment Letter

In this comment letter, the CAQ responds to the PCAOB’s proposed amendments related to Rule 3502 Governing Contributory Liability. We express concerns and our view that the Board’s proposal to amend the standard for contributory liability from one of recklessness...

In this comment letter, the CAQ responds to the PCAOB’s <a href="https://assets.pcaobus.org/pcaob-dev/docs/default-source/rulemaking/053/pcaob-release-no.-2023-007-rule-3502-proposal.pdf?sfvrsn=7d49cc51_9">proposed amendments related to Rule 3502 Governing Contributory Liability</a>. We express concerns and our view that the Board’s proposal to amend the standard for contributory liability from one of recklessness to negligence is not adequately supported.

We believe that any project to modify the framework by which auditors can be held liable for violations of PCAOB rules and standards should include a clear assessment of why that current framework exists and whether, in practical application, the current framework has impeded the PCAOB’s effectiveness in bringing enforcement actions to fulfill its mission.

Our primary concerns are that:

1. Adoption of the Proposed Rule Could Have Unintended Consequences by Negatively Impacting Audit Quality
We are concerned that the proposal could exacerbate the accounting talent crisis. We believe there is a risk of inefficient and unproductive “self-protective” behavior that will occur if the amendments are approved. Further, the Proposal could have a negative impact on small firms and reduce the market for audit services.
2. The Rationale for the Proposal Is Not Clear. We are concerned the proposal does not have an adequate cost-benefit assessment.

3. Individual Liability for Single Instances of Simple Negligence Would be Contrary to SEC Practice and Inappropriate
Although the Board notes the SEC holds similar power under Exchange Act Section 21C, its conclusion that the proposed modification of Rule 3502 would merely put the PCAOB on par with the SEC is unsupported.
4. The Legal Basis for a Contributory Liability Standard Based in Negligence Is Not Clear
The Board appears to rely on Sections 103 and 105. Neither of these provisions provides a basis for the proposed rule.
Read the full comment letter <a href="https://thecaqprod.wpenginepowered.com/wp-content/uploads/2023/11/caq_pcaob_rule-3502_2023-11.pdf">here</a>.

Comment Letter | Proposed Amendments to PCAOB Rule 3502 Governing Contributory Liability; PCAOB Rulemaking Docket Matter No. 053

In June 2023, the Public Company Accounting Oversight Board (PCAOB) proposed amendments to its auditing standards related to a company’s noncompliance with laws and regulations, or NOCLAR for short. The proposed amendments garnered the attention of a diverse group of stakeholders, resulting in 139 individual comment letters. Several comment letters were also submitted on behalf of a group of individuals or organizations, including close to 300 additional signatures captured in those letters.

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