CAQ Asks PCAOB to Extend Comment Period on a Pair of Proposed Standards

The Center for Audit Quality has asked the Public Company Accounting Oversight Board for a 60-day extension on the comment period due date for two proposed standards the board released last month.

The PCAOB issued a pair of proposals on April 9, one of which would require audit firms to publicly disclose a set of 11 metrics—including the involvement of partners and managers on an audit, auditor workload, and auditor turnover—on a new Form FM that would be accessible to investors.

The other proposal issued by the PCAOB would amend the board’s annual and special reporting requirements to “facilitate the disclosure of more complete, standardized, and timely information by registered public accounting firms.”

The comment period for both proposed standards is set to end on June 7.

In a letter to the PCAOB dated May 22, the CAQ said both proposals are important for investors, audit firms, and other stakeholders to consider, dense with specific proposed metrics, detailed proposed calculations, and new firm reporting requirements.

An extension to the June 7 due date for comment letters “will enable commenters to carefully consider the proposed requirements, including the impact of the final requirements included in recently adopted standards, and share thoughtful recommendations that will help the PCAOB finalize their standards and rules with requirements that have increased potential to improve audit quality while minimizing unintended consequences,” the CAQ said in the letter.

The CAQ requested the comment period be extended to 120 days from the original proposal date to enable all stakeholders, including the CAQ, to carefully weigh and consider the proposed requirements and develop well-reasoned and constructive comments.

“Given the complexity and a significance of the proposals and simultaneous standard-setting activities, we find that a 60-day comment period does not provide sufficient time for stakeholders to provide the most comprehensive and meaningful feedback,” the CAQ said.

Also in the letter, the CAQ recommended that the PCAOB delay sending the 19b-4 filing to the Securities and Exchange Commission (SEC) regarding the board’s recently adopted quality control standard (QC 1000) and standard on the general responsibilities of an auditor (AS 1000) by at least 45 days or, if already filed, withdraw and resubmit in 45 days “to allow ample time to review and consider the complex proposals and standards.”

19b-4 filings are submissions by self-regulatory organizations to the SEC that notify the commission of a proposed rule change. The SEC still needs to approve the PCAOB’s new quality control and general auditor responsibilities standards before they take effect.