By Michael Cohn
The Public Company Accounting Oversight Board is giving auditing firms up to 45 days of relief from inspections until May 11, given the difficulties businesses are facing from the novel coronavirus.
“The COVID-19 crisis presents a unique set of challenges for investors, issuers, broker-dealers, auditors, and regulators. In determining how best to shape our inspections program during this time of economic uncertainty and dislocation, we are guided by two core considerations: (1) the health and safety of our employees and those with whom we interact; and (2) our statutory mission to promote audit quality, including by conducting our inspections program,” the PCAOB said in an email Monday.
Last week, the PCAOB also announced that it was altering its inspection process to more of a remote approach, with officials and employees mostly working from home (see our story). The 45-day pause in inspections will make that approach more feasible, but the PCAOB noted that it may still request audit documentations for certain engagements during that time.
“In balancing these considerations, we have made the decision to provide PCAOB-registered audit firms an up to 45-day relief period from inspections, with the exception of providing us access to audit documentation for certain engagements,” said the board. “Audit firms that wish to avail themselves of the 45-day relief period in full or in part should reach out to their designated inspections point of contact. We expect to fully resume inspections beginning May 11, 2020.”
The PCAOB hopes the delay will offer firms more time and flexibility to work with their clients as the world faces the spreading pandemic, which has been devastating the economy in the U.S., Europe and China.
“This opportunity for a pause will give audit firms the time, resources, and flexibility to work through significant matters with their issuer and broker-dealer clients,” said the PCAOB. “At the same time, our inspections staff can continue their important work by reviewing documentation for certain engagements remotely and preparing for inspections.”
The PCAOB plans to monitor the rapidly changing situation and reassess its policies as appropriate.
The Center for Audit Quality welcomed the PCAOB relief. “The CAQ supports the decision issued by the PCAOB today to provide public company audit firms with an optional up to 45-day relief period for inspections, subject to the exceptions identified,” said CAQ executive director Julie Bell Lindsay in a statement Monday. “We agree with the PCAOB that this decision appropriately balances the unique challenges and dislocation facing preparers, auditors, regulators and investors with the need to never lose sight of audit quality. Rest assured that audit quality remains a top priority for the public company auditing profession and this focus will play a key role in helping to reinforce investor confidence in the integrity of financial reporting during this period of economic uncertainty.”
Originally published by Accounting Today.