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PCAOB Adopts New Standard on Auditor Communications

The Public Company Accounting Oversight Board has adopted a new Auditing Standard No. 16, entitled "Communications with Audit Committees."  This auditing standard must be approved by the SEC to become final.

The new standard does not require additional audit work to be performed.  Instead, the standard applies only to communications between the auditors and the audit committee.  The standard requires communication on significant, unusual transactions, as well as on the company's ability to continue as a going concern.  The standard also encourages robust two way communications as a means by which to improve the integrity of the audit.  In the words of the PCAOB:

"The standard establishes requirements that enhance the relevance and timeliness of the communications between the auditor and the audit committee, and is intended to foster constructive dialogue between the two on significant audit and financial statement matters."

The text of the new standard can be found here.