PCAOB Proposes New Quality Control Standard
The Public Company Accounting Oversight Board (PCAOB) recently issued for public comment a proposed new standard for quality control (QC) systems. The Board requests public comment on the proposal by Feb. 1, 2023.
Current QC standards were developed and issued by the AICPA before the PCAOB was established in 2002. As the auditing environment has changed significantly since that time, QC is a pressing area for modernization, the PCAOB said. In December 2019, the Board issued a concept release that generated comment letters from firms, investors, investor advocates, academics, trade groups and others. This input, along with the PCAOB’s own quantitative and qualitative economic analysis, helped to inform the proposal.
The proposed standard, if adopted, would replace the current QC standards in their entirety and would provide a framework for a firm’s QC system grounded in proactively identifying and managing risks to quality, with a feedback loop from ongoing monitoring and remediation designed to drive continuous improvement. Among other provisions, the proposal would foster a more structured approach where a firm would annually evaluate its QC system and report the results of its evaluation on new Form QC.
Detailed questions are included throughout the proposal, and commenters are encouraged to (1) comment on any or all topics, (2) respond to any or all questions, (3) provide feedback in areas not covered by specific questions and (4) provide any evidence that informs commenters’ views.
The learn more about how to submit comments on the proposal, visit the PCAOB’s Public Comment page.