On March 17, 2023, Chief Accountant Paul Munter issued a Statement titled “Responsibilities of Lead Auditors to Conduct High-Quality Audits When Involving Other Auditors.”  In the Statement, Mr. Munter notes that:

“In 2021, for example, 26 percent of all issuer audit engagements and 57 percent of large accelerated filer audits involved the use of other auditors by the lead auditor.”

The Statement begins with a summary of shortcomings the Office of the Chief Accountant has observed in audit engagements where another auditor is involved.  These include using other auditors who are not registered with the PCAOB, failure to communicate the correct legal entity name of other firms, and providing audit committees incomplete information about network firms.  The Statement then addresses:

• • The importance of quality control processes when other auditors play a role in an engagement,
  • Roles of network firms,
  • Independence considerations, and
  • Good practices for audit committees and issuers.

In his conclusion, Mr. Munter states:

“The relevant risks should be considered and the appropriate PCAOB standards must be applied in order to strengthen lead auditors’ supervision over the work of other auditors, within and outside of network firms, to help enhance audit quality.”

As always, your thoughts and comments are welcome!