Corporate Governance

New Auditors? Reports without Audits

By Fei-Lu Qian

In order to make auditing firms more transparent to the investing public, the Public Company Accounting Oversight Board (?PCAOB?) recently adopted rules that will require firms to file with the PCAOB their own annual reports and special interim reports. Now, the PCAOB will submit the adopted rules to the SEC for approval. If approved, the new reporting requirements will go into effect on June 30, 2009.

Specifically, under the new rules, an auditing firm will annually provide basic information about the firm such as audit reports issued by the firm in the last year, certain disciplinary historical information on employees, and information on fees billed to issuer audit clients. Besides the annual report, an auditing firm will also be required to report certain special events such as certain legal, administrative, or disciplinary proceedings against the firm or certain individuals.

The PCAOB plans to make the reports available to the public on its website. However, an auditing firm will be able to petition for confidential treatment of its information on a case-by-case basis. Moreover, and unfortunately, a shortfall to the new rules will not require that the reports be independently audited.

Full post as published by PomTalk on June 11, 2008 (boomark / email).