Wiley Practitioner's Guide to GAAS 2015: Covering all SASs, SSAEs, SSARSs, PCAOB Auditing Standards, and Interpretations

PCAOB 16 Communicating with Audit Committees¹

APPLICABILITY

This standard applies to communications with audit committees. AS No. 16 is the first PCAOB standard adopted after the Jumpstart Our Business Act of 2012, which exempted “emerging growth companies” from new standards unless the SEC determines application is necessary. The SEC has determined that AS 16 will apply to audits of emerging growth companies.

OVERVIEW

AS No. 16 requires specific types of communications by an auditor with a client's audit committee prior to issuance of the auditor's report. AS No. 16 retains many existing requirements, incorporates those required under SEC rules (SEC Rule 207), supersedes AU Section 380, Communication With Audit Committees, AU Section 9380, Interpretations of Section 380, AU 310, Appointment of the Auditor, and creates some new requirements. The standard does not replace communication requirements in other PCAOB rules and standards.

The PCAOB expects that some of these communications have occurred previously, but others may require new procedures. The PCAOB intent is to encourage two-way communication between the audit committee and the auditors.

The PCAOB believes that the new standard will improve audits by:

• Informing audit committees about significant matters related to the audit and financial statements
• Enabling the auditors to get the committees' insights and information and learn about complaints
• Helping the auditors get a better understanding of the company and its ...