PCAOB Proposes Important Changes To Audit Reports

The Public Company Accounting Oversight Board ("PCAOB") recently proposed new auditing standards¹ that, if adopted, would substantially expand the content of audit reports. Under the current model for audit reports, auditors give a "pass/fail" assessment of whether a company's financial statements present fairly, in all material respects, its financial position. Auditors are not required to disclose in these current audit reports any issues that arise during the audit process. Without eliminating the "pass/fail" component of the current model, the new standards would impose two new requirements on auditors that are designed to enhance the usefulness of audit reports.

Critical Audit Matters