SEC Approves PCAOB Proposed Audit Standards

In August, the Securities and Exchange Commission (SEC) approved the two Public Company Accounting Oversight Board’s (PCAOB) proposed audit standards as well as an amendment to PCAOB’s contributory liability rule. The new AS 1000, General Responsibilities of the Auditor in Conducting an Audit, serves to consolidate prior accounting standards and remove outdated or inconsistent provisions. The new standard and related amendments will take effect for audits of financial statements for fiscal years beginning on or after December 15, 2024, although accounting firms that provide audit opinions for 100 or fewer issuers will have an additional year to comply. 

The SEC also approved the PCAOB’s amendments to AS 1105, Audit Evidence, and AS 2301, The Auditor’s Response to the Risks of Material Misstatement, and related amendments to provide guidance relating to the responsibility of auditors when using technology-assisted data analysis and tools in conducting audits.  Additionally, the SEC approved the PCAOB’s amendment to Rule 3502, Responsibility Not to Knowingly or Recklessly Contribute to Violations, which revises from recklessness to negligence the standard for an associated person’s contributory liability, while maintaining the requirement that to be held liable. An associated person must have contributed to the firm’s violation “directly and substantially.” 

Click here to read the SEC Press Release.