The Auditor's Report: Is "Pass/Fail" Enough?

In August, the Public Company Accounting Oversight Board ("PCAOB") issued a proposal that calls for enhanced communication from Auditors—in addition to the traditional Pass/Fail opinion—in Audit Reports (PCAOB Release No. 2013-005).  If this proposal is approved, it would be the first significant change to the audit report in more than 70 years, according to PCAOB Chairman James Doty.  The proposed changes are based on the premise that investors and financial statement users want more information from auditors, and these changes would represent a huge landscape change for the audit profession.

The proposal is open for public comment until December 11.  In addition to the traditional pass/fail opinion (also known as a "clean" or "qualified" opinion), the proposal would require auditors to report on matters addressed during the audit that: