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C C O U N T I N G

& A U standards setting

D I T I N G

Disclosure of the Engagement Partner in the Audit Report
An International Perspective on the PCAOB Proposal
By Jason Bergner and Ling Lin n December 4, 2013, the PCAOB conducted an open meeting to reconsider its proposal to require the disclosure of the engagement partner (and certain other participants) in the audit report, as part of its efforts to improve transparency. The PCAOB is carefully considering the likely costs and benefits of this requirement before making a final decision (http://pcaobus.org/News/Speech/Pages/120 42013_Harris_Transparency.aspx). The authors present arguments for and against requiring audit partner disclosure and summarize the current practice and empirical findings in foreign jurisdictions, such as the EU and China. While the debate for the past five years has been an argument about the possible costs and benefits of a signature or disclosure requirement, the authors believe that the movement of the international community toward adopting common standards may eventually warrant a similar U.S. approach.

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Debating the Issue The signature/disclosure requirement has been an issue for almost a decade, first appearing on the PCAOB’s agenda in 2005 (Tammy Whitehouse, “Divided PCAOB Presses for Names in Audit Report,” December 4, 2013, Compliance Week, http://www.complianceweek.com/dividedpcaob-presses-for-names-in-audit-report/article/323604/). The current proposal to disclose of the engagement partner in the audit report stemmed, at least in part, from the 2008 Final Report of the Advisory Committee on the Auditing Profession (ACAP) (PCAOB Release 2011-007, “Improving the Transparency of Audits: Proposed Amendments to PCAOB Auditing Standards and Form 2,” http://pcaobus.org/ Rules/Rulemaking/Docket029/PCAOB_ Release_2011-007.pdf). That report con44

tained seven