New Rules Expected for Annual Audit Reports requiring auditors to tell investors more about what they find in companies’ books
August 13, 2013 Leave a comment
Updated August 12, 2013, 9:03 p.m. ET
New Rules Expected for Annual Audit Reports
The annual audit report is about to get an extreme makeover. After seven decades in which the auditor’s letter hasn’t changed much, U.S. regulators on Tuesday are expected to propose major new rules requiring auditors to tell investors more about what they find in companies’ books. The Public Company Accounting Oversight Board, the government’s audit-industry regulator, is pushing the accounting industry to disclose more about its views on a company, which some say will make the document attached to each public company’s annual report more useful, albeit a little longer. While the PCAOB hasn’t said specifically what it will propose, having auditors provide their opinions on broader matters appears likely to be the crux of it. Regulators and industry critics say investors need more information from auditors about matters such as whether a company’s accounting is aggressive, and what auditors think are the most important features of a company’s finances. Many investors rely on the audit report to help assure them a company’s numbers are accurate. But some critics have become concerned that the letters’ boilerplate, pass-fail format doesn’t tell investors much about what is actually happening at a company or where problems may lie. “It’s been 70 years since there has been a fundamental change to the information the public receives about the audit,” PCAOB Chairman James Doty said. A revamped audit report will be “a significant step” in the effort to “provide more useful reporting to the public,” he said. Read more of this post










