SEC Approves PCAOB, Form AP, on Disclosing Engagement Partner Name
PCAOB rules for disclosing the name of the engagement partner and information about other firms participating in audits have been approved by the SEC. Starting January 31, 2017, auditors will be required to fill out Form AP with the PCAOB disclosing all engagement partners working on public audits and information about other audit firms participating in the audit. This information will be searchable by engagement partner name, audit firm, or public company on a public database.
This new implemented set of rules will be beneficial for many reasons:
1. Shareholders will be able to assess the quality of an audit by searching through the database and reviewing the partners history. Form AP will effectively provide this important information to the public. PCAOB chairmen, James Doty, stated, "There are numerous factors required to achieve a high quality audit, but the role of the engagement partner in promoting quality, or allowing it to be compromised, is of singular importance to the ultimate reliability of the audit."
2. Form AP may expose trends as the public will be able to inspect the history of the engagement partner. This tool can be used to form judgments and knowledge about the experience of auditors as well as the quality of work they provided.
3. Companies hiring auditors will be able to research different auditing firms and the partners working there. Companies can then hire more reputable auditors by making comparisons of other audit firms. A well run company needs knowledgeable, experienced auditors to confidently examine the materials and take proper steps when needed.
The PCAOB rules were unanimously passed by the PCAOB in December, 2015 after years of controversy. Overall, this searchable database will allow investors, companies, and the public to examine and make reasonable judgments about the reputations and experience of external auditors.
Review the complete PCAOB Rules and Amendments here.