PCAOB Proposes Changes to Auditor’s Reporting Model

The Public Company Accounting Oversight Board addressed the need to increase transparency in public company audits by publishing a concept release. Scheduled for discussion in Q3 2011, the concept release discusses changes to the auditor’s reporting model, including expanding from a pass/fail model to a more robust report that incorporates analysis and audit assurance on information outside the financial statements. According to PCAOB member Daniel Goelzer, “Under some ideas floated in the concept release, auditors would be required to provide commentary on such matters as management’s judgments and estimates and its selection of accounting policies and practices.” The PCAOB is accepting public comment through September 30, 2011.