SEC Approves PCAOB Amendments to Supervisory Standards for Lead Auditors

The SEC approved Public Company Accounting Oversight Board ("PCAOB") amendments to its auditing standards aimed at providing clearer responsibility for a lead auditor when multiple audit firms are involved.

PCAOB adopted the amendments on June 21, 2022. PCAOB said that the amendments address coordinating and communication challenges that can "lead to misunderstandings about the nature, timing, and extent of the other auditors’ work and can reduce audit quality." PCAOB said that the amendments (i) specify "certain procedures for the lead auditor to perform when planning and supervising an audit that involves other auditors" and (ii) "apply[] a risk-based supervisory approach to the lead auditor’s oversight of other auditors for whose work the lead auditor assumes responsibility."

The amendments apply to all audits, conducted under PCAOB standards, of financial statements for fiscal years ending on or after December 15, 2024.

SEC Chair Gary Gensler applauded the new standards, saying "robust standards for how lead auditors supervise, communicate with and coordinate with other auditors" were needed due to the challenges and complexities of multi-firm audits. SEC Commissioner Mark T. Uyeda also supported adopting the new standards, stating that the new standards "demonstrate a thoughtful and thoroughly considered approach to rulemaking."