[29372]
September 29, 2015
TO: INVESTMENT COMPANY DIRECTORS No. 31-15ACCOUNTING/TREASURERS COMMITTEE No. 25-15 RE: IDC/ICI COMMENT LETTER ON PCAOB CONCEPT RELEASE
IDC and ICI filed the attached comment letter on the Public Company Accounting Oversight Board (PCAOB) concept release relating to audit quality indicators (AQIs). [1] The letter supports in concept the Board’s project to develop a portfolio of quantitative measures whose use may enhance stakeholders’ ability to assess audit quality, but questions the utility and advisability of including investment companies in the AQI project, given the significant differences in audits of investment companies and audits of operating companies. The letter therefore recommends that fund audits be excluded from the AQI project. The letter states that if the PCAOB determines to include them, then it is imperative for the success of the project that AQIs for investment company audits be calculated separately from AQIs for audits of other companies.
The letter also recommends that the PCAOB:
- Continue its work on identifying the root causes of audit success and deficiencies, so that it can fully establish a correlation between its audit quality indicators and audit quality;
- Consider a “phased approach” to implementing the indicators, to provide time to study their effectiveness; and
- Continue to clarify that the indicators are tools to stimulate inquiries and guide discussions of audit committees and investors, not best practices or benchmarks for determining audit quality or whether an auditor has met its obligations.
Lisa C. Hamman
Senior Associate Counsel
endnotes
[1] See Memorandum No. 29179 (July 16, 2015) for a summary of the concept release.