backOn May 13, 2024, the PCAOB adopted a new auditing standard, AS 1000, General Responsibilities of the Auditor in Conducting an Audit, as well as a new quality control standard, QC 1000, A Firm’s System of Quality Control, and amended certain other standards. AS 1000 merges auditing principles regarding due professional care, professional skepticism, competence, and professional judgment into a single standard. The new standard modernizes existing standards, but does not create new responsibilities. In particular, AS 1000 clarifies the auditor’s responsibility to evaluate whether financial statements are presented fairly, the significance of the role of engagement partners, and the scope of the required professional skepticism. It also reduces the time to compete final audit documentation from 45 days to 14 days. AS 1000 takes effect for audits for fiscal years beginning on or after December 15, 2024, with some firms excepted from the new documentation timing until fiscal years beginning on or after December 15, 2025.
QC 1000 replaces a standard that predated the PCAOB and is intended to cause audit firms to significantly improve their quality control systems. The standard requires all PCAOB-registered firms to identify their specific risks and design quality control systems that include procedures designed to guard against those risks. Firms must also perform an annual evaluation of the firm’s QC system, the results of which must be reported to the PCAOB on a new Form QC certified by key firm personnel. Firms auditing more than 100 issuers annually also must establish an external oversight function for the QC system, utilizing one or more persons who can exercise independent judgment.