Comment: PCAOB NOCLAR amendments

 

In our comments on the PCAOB’s proposed amendments related to a company’s noncompliance with laws and regulations (NOCLAR), we support the Board’s objective to modernize and clarify its auditing standards and its desire to clarify the auditor’s role relative to NOCLAR and fraud. We believe that enhancing certain risk assessment concepts, as well as communications with management and audit committees, will benefit audit quality and, in turn, protect the public interest.


At the same time, we share the reservations expressed by Board Members Duane DesParte and Christina Ho in their individual public statements. We have considerable concerns with the proposed risk assessment and performance requirements, including their feasibility, as well as how the proposed requirements seem to fundamentally change the auditor’s role in a manner that ultimately could be detrimental to the public interest.

 

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