Loyal readers of this blog won’t be surprised that we’re disappointed that the SEC has again perfunctorily approved another proposal of the Public Company Accounting Oversight Board, or PCAOB. (If you haven’t been following our blog, you can find our prior screeds here and here, among other places.)
The victim this time is the auditor report. The new PCAOB standard requires an expansion of the auditor report to include the auditor’s tenure; a statement that the auditor is required to be independent; and some other language changes. It also requires the report to be addressed to the company’s shareholders and directors. But the plotz (no typo) de resistance is a requirement to disclose so-called “critical audit matters”.