Investor Preferences Being Considered for Auditor’s Reporting Model
When the Public Company Accounting Oversight Board (PCAOB) Office of the Chief Auditor (OCA) presented an update on 22 March on outreach to investors and others about changes to the auditor’s reporting model, it cited a 2008 CFA Institute survey (PDF) in which members requested more information about how the auditors reached their opinions. In particular, the identification of key risk areas, significant changes in risk exposures, and amounts requiring judgment and involving uncertainty.
The PCAOB is preparing to issue a concept release, perhaps as early as this summer, which will propose changes to the auditor’s reporting model, including modifications to meet additional investor and user needs.
Further, during the presentation Chief Auditor and Director of Professional Standards Martin F. Baumann, said, “The auditor’s reporting model is a top standard-setting priority of the Board. To better inform their investment decisions, investors say they need to hear more from the auditor about the risks auditors faced in the audit and about judgments and estimates management used in the financial statements.”
The survey cited above, in addition to a CFA Institute survey conducted in March 2010, are part of an ongoing effort on the part of CFA Institute to inform the PCAOB and the International Auditing and Assurance Standards Board (IAASB) as these standard setters work to recommend improvements to the auditor’s reporting model.