The Securities and Exchange Commission (SEC) has approved two proposals from the Public Company Accounting Oversight Board (PCAOB) to update audit standards and amend an ethics rule governing auditor liability. The new standards, including AS 1000 and General Responsibilities of the Auditor in Conducting an Audit, aim to modernize and consolidate the auditor's general responsibilities, reinforcing the duty to protect investors through accurate and independent reporting. Additionally, the SEC approved amendments to AS 1105 and AS 2301, addressing the use of technology-assisted data analysis in audits, and clarifying the auditor's responsibilities when employing such tools.
The SEC also approved an amendment to PCAOB Rule 3502, which revises the standard for auditor liability from recklessness to negligence, aligning it with other professional conduct standards. This amendment will take effect in 60 days, with specific implementation timelines for the new auditing standards depending on the size of the audit firms. SEC Chair Gary Gensler expressed support for these changes, emphasizing their importance in maintaining investor trust in the markets. The PCAOB’s updated standards and rules reflect its ongoing commitment to fulfilling its obligations under the Sarbanes-Oxley Act and ensuring high-quality audits that protect investors.
