PCAOB Shares Good Practices for Auditors on Engagement Acceptance
July 7, 2025
This edition of "Audit Focus" highlights key reminders for auditors of small public companies or brokers and dealers on engagement acceptance and why it's a critical part of the audit process.
The latest edition of the Public Company Accounting Oversight Board’s “Audit Focus” series highlights key reminders for auditors who audit smaller public companies of U.S. auditing standards related to engagement acceptance for initial engagements for new clients.
“The decision of whether or not to accept an engagement is a critical part of the audit process,” the PCAOB said in a media release on Monday. “Audit firms have a responsibility to undertake only those engagements that they can reasonably expect to be completed with professional competence.”
Applicable PCAOB standards related to engagement acceptance, according to “Audit Focus,” include QC 20, System of Quality Control for a CPA Firm’s Accounting and Auditing Practice; QC 1000, A Firm’s System of Quality Control, which goes into effect on Dec. 15, 2025; AS 2610: Initial Audits—Communications Between Predecessor and Successor Auditors; and AS 1301: Communications with Audit Committees.
This latest “Audit Focus” also shares good practices that the PCAOB staff has observed, including the following:
Assessing partner capacity: In both the acceptance and continuance process, audit firms have implemented a “scorecard” where points are assigned to a partner based on the number and type of audits already served to determine whether the partner has capacity to take on additional engagements.
Implementation of a pre-assessment process: Before bidding on the engagement, audit firms implemented an evaluation team to pre-vet potential engagement prospects to determine whether the engagement is an appropriate fit for the audit firm.
Use of templates: Audit firms used templates to help guide a balanced decision on whether or not to proceed with a potential engagement opportunity.
“Audit Focus” is a series of PCAOB publications that aims to provide easy-to-digest information to auditors, especially those who audit smaller public companies. Each edition of “Audit Focus” reiterates the applicable auditing standards, rules, and/or staff guidance, as well as offers reminders and good practices tailored to PCAOB-registered auditors of smaller companies—all with an eye toward protecting investors and improving audit quality.
Previous editions of “Audit Focus” have covered topics such as journal entries, audit committee communications, and critical audit matters. They can be found at the PCAOB’s Staff Publications and Information for Smaller Firms pages.
[CPA Practice Advisor]
