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Heads Up: PCAOB Proposes Changes to the Auditor’s Reporting Model and the Auditor’s Responsibilities Regarding Other Information

Volume 20, Issue 30


by Megan Zietsman, Deloitte & Touche LLP, and Jennifer Burns, Ashley Pruitt, and Brent Simer, Deloitte LLP

On August 13, 2013, the PCAOB issued Release 2013-005, Proposed Auditing Standards — The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion; The Auditor’s Responsibilities Regarding Other Information in Certain Documents Containing Audited Financial Statements and the Related Auditor’s Report; and Related Amendments to PCAOB Standards, which proposes two new auditing standards on the auditor’s reporting model and on the auditor’s responsibilities for other information included in annual reports filed with the SEC. The release also proposes conforming changes to certain PCAOB standards.

While retaining the current “pass/fail” approach to the audit report, the PCAOB’s proposal represents the most significant expansion of tailored information provided about a financial statement audit by auditors to the user community in the profession’s history. The Board is proposing the revisions in response to concerns expressed in feedback by U.S. and global audit standard-setting constituents, including investor groups, that the current auditor’s report contains little or no information specific to a particular audit. Investors also indicated that they would benefit from the auditor’s unique and relevant insights.

The proposed changes are intended to (1) increase the informational value, usefulness, and relevance of the auditor’s report and (2) expand the auditor’s responsibilities (and related procedures) for information outside the financial statements. The significant proposed changes include:

  • The addition in the auditor’s report of a new section in which critical audit matters (CAMs) specific to an audit would be communicated.
  • Enhanced language in the auditor’s report about the auditor’s responsibilities, and new statements in the report intended to communicate more information about the audit and the auditor, including disclosures about auditor independence and tenure.
  • An expansion of the auditor’s responsibilities for other information in the annual report, and disclosure about this responsibility in the auditor’s report, along with a statement about the results of the new required evaluation of that other information.

In a news release announcing the proposed standards, Martin Baumann, PCAOB chief auditor and director of professional standards at the PCAOB, stated the following:

The goal of these proposed standards and amendments is to significantly improve the current auditor reporting model by requiring the auditor to communicate specific information about each audit based on audit procedures performed.


The release indicates that the proposed standards and amendments would be effective for audits of financial statements for fiscal years beginning on or after December 15, 2015; however, this date depends on the timing of approval by the PCAOB and SEC of any final standard and related amendments. We encourage all financial statement stakeholders, including audit committees, company management, investor groups, and others, to study the release and submit comments to the PCAOB. See the "Next Steps and Request for Public Comment" section in the attached Heads Up for information on how to submit comments.

This Heads Up (available from the Download button above) provides an overview of the two auditing standards proposed in the release. For past issues of Heads Up, visit the archive.

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