PCAOB proposes new audit confirmation standard

The Public Company Accounting Oversight Board (PCAOB) has proposed a new standard for auditors use of confirmation which is aimed at modernising the process.

The proposed standard includes principles-based requirements that would apply to all methods of confirmation, including paper-based and electronic communications. If accepted, the proposal would better integrate the confirmation standard with the PCAOB’s risk assessment standards.

The confirmation process involves an auditor sending a confirmation request directly to a confirming party evaluating the information received, and addressing nonresponses and incomplete responses.

Erica Y. Williams, PCAOB chair, said: “During times of economic uncertainty, the risk of fraud is heightened, and auditors have to be more vigilant than ever. When done right, confirmation can be a critical tool to help auditors combat fraud and keep investors protected.”

The PCAOB is requesting public comment on the proposal by 20 February 2023.