Auditors will have to provide more detailed information when signing off companies’ financial statements under a controversial proposal put forward by a US watchdog partly aimed at preventing accounting scandals.
The new requirements would be the first overhaul of the so-called standard “auditor’s report” since the 1940s, according to the Public Company Accounting Oversight Board (PCAOB), which yesterday voted unanimously in favour of the proposal.
For more than 70 years the auditor’s report has consisted of a boilerplate “pass or fail” statement, with auditors either choosing to sign off a company’s accounts or not. Under the PCAOB proposal, accounting firms will have to disclose to investors the most difficult and subjective judgments they make when performing their audits.