Public Company Accounting Oversight Board (PCAOB): Proposed Changes to the Independent Auditor's Report

Abstract

The ultimate goal of an independent auditor is to issue an opinion in the form of a report on the financial statements and internal control audit conducted. The auditor's report in accordance with the standards of the Public Company Accounting Oversight Board report consists of the introductory, scope, opinion, internal control paragraph, and sometimes an explanatory paragraph depending upon the type of report being issued. These paragraphs delineate the role of the auditor and client management during the reporting and audit process, whether or not the audits were conducted in accordance with PCAOB standards, and an opinion that the financial statements were stated fairly in all material respects and that the internal controls were operating effectively. This has been the way auditors reported their opinions for 70 years when it came to reporting on financial statements for a public company, with the exception of internal control reporting, which only came into effect after passage of the Sarbanes-Oxley Act in 2002. However, on June 21, 2011, the PCAOB issued a concept release on possible changes to the auditor's report.