Audit Quality in the Post-SOX Audit Environment: What Your Auditing Students Must Know about the PCAOB Inspection Process

TLDR

Educational issues arising from the PCAOB inspection process were highlighted at the AAA Auditing Section Midyear Meeting in January 2007. The paper seeks to provide an overview of the PCAOB inspection process and report on a panel discussion aimed at preparing students for careers in the post‑Sarbanes‑Oxley audit environment. The authors reviewed the PCAOB inspection process, documented the panel discussion and Q&A, conducted follow‑up interviews with panelists, and compiled classroom case material and resources. The panel discussion revealed that PCAOB standards and inspection feedback have altered audit documentation and processes, and follow‑up interviews confirmed these changes.

Abstract

SUMMARY: At the American Accounting Association’s (AAA) Auditing Section Midyear Meeting in January 2007, the Education Committee organized a panel to discuss the educational issues that have surfaced as a result of the PCAOB inspection process. The discussion focused on changes that have occurred in the audit environment, particularly concerning audit documentation and the audit process, as a result of the PCAOB auditing standards and feedback to the firms from the PCAOB inspection process. The goal was to provide a forum for panelists to interact with educators, to develop suggestions to help prepare students for their careers in the post-Sarbanes-Oxley auditing environment. In this paper, we first provide an overview of the PCAOB inspection process and then provide a report on the actual panel discussion, which included a spirited question-and-answer session with the audience. We also incorporate the results of follow-up interviews with the three panelists that occurred in April 2008. Finally, we provide case material and other resources to assist professors as they incorporate the panelists’ suggestions related to PCAOB inspection issues in the classroom.