As reported by the Financial Times earlier this month, accounting firms in the US are opposing new rules that would require auditors of public companies to disclose metrics related to audit quality, like team experience, seniority levels, workload distribution, and annual training.
Although introduced by the Public Company Accounting Oversight Board (PCAOB) in November, the rules need Securities and Exchange Commission (SEC) approval to come into effect. The proposal has received significant opposition from audit firms. Global accounting giant Deloitte wrote a letter to the SEC stating that the disclosures may “confuse investors and other stakeholders, rather than benefit them,” while accounting firm CohnReznick emphasized that “no two firms are identical as are no two issuer audits.
Many firms have argued that such information should be shared exclusively with audit committees. Deloitte noted the PCAOB’s rapid rulemaking is “piling new costs onto audit firms and causing stress in the system.” The American Institute of CPAs warned the additional burden might drive small and midsize firms to abandon public company audits entirely.
The PCAOB’s initiatives have faced some criticism for allegedly being politically driven under the Biden administration. With SEC Chair Gary Gensler stepping down in January, Republican commissioners, who share similar concerns, will assume control. Their leadership is expected to influence the fate of these rules and PCAOB rulemaking going forward.
Join The Discussion