PCAOB to auditors: Check your work

The PCAOB’s seeing more than its share of deficiencies on Form AP, the board noted in a recent staff publication. And while many of these deficiencies involve somewhat fiddly matters, such as calculating how many hours a given firm worked on an audit, others are pretty straightforward.

All audit firms need to file a Form AP for each audit they perform. The form includes information like which firms worked on the audit and what percentage of the work they completed. Auditors must provide contact information for each firm that completed 5% or more of hours worked on an audit. They must also list the firms that contributed less than 5% of hours worked, as well as the percentage of the audit each one completed.

On Form AP, PCAOB staff have seen auditors incorrectly calculate the number of hours each firm completes, or inaccurately state the number of firms contributing less than 5% of the work.

Other deficiencies seem more like typos or oversights: getting an issuer’s name or state wrong; failing to provide an issuer’s Central Index Key number or listing an incorrect one; failing to state whether an issuer is an employee benefit plan, an investment company, or another type of entity; or giving the wrong date for an audit.

Best practices that the PCOAB recommends include using or creating a “structured template” to fill out Form AP, providing training on how to use the templates, and having a partner outside the audit engagement team review the form to ensure it’s complete.