PCAOB reconsidering auditors’ role in noncompliance reporting

February 27, 2024

The PCAOB will host a public virtual roundtable March 6 and has reopened the public comment period regarding its proposal to amend auditing standards related to the auditor's responsibility for considering a company's noncompliance with laws and regulations (NOCLAR).

The virtual meeting, set for March 6 at 9:30 a.m. ET, includes panel discussions featuring a cross section of stakeholders talking about the proposal's requirements relating to auditors' identification of laws and regulations and assessment of those laws and regulations, as well as costs and benefits of the proposal. Interested parties have an opportunity to comment on the proposal before and after the meeting — the public comment period has reopened and will remain open until March 18.

The PCAOB issued the proposal on June 6, 2023, and initially accepted comments through Aug. 7, 2023. In a briefing paper published in advance of the virtual meeting, the PCAOB reported that it received 140 comment letters and decided to reopen the comment period and hold the roundtable meeting in response to "significant public interest in the proposal, including requests from commenters for the board to engage in additional public outreach."

According to the briefing paper, some commenters believe the proposal as written would "expand the scope of an integrated audit into areas outside the auditor's expertise and into areas that management itself need not address in preparing the financial statements."

Many commenters, according to the briefing paper, also expressed cost concerns related to "the need for involvement of legal specialists and experts; the potential need for companies to allocate more internal resources to comply with the proposal; the potential for increased cost, time, and inefficiencies that could arise from duplicative compliance-related tasks; and the potential for increased costs of professional indemnity insurance for firms."

[Journal of Accountancy]