Nearly three weeks after adopting a set of new auditing standards from the PCAOB, the SEC recently approved another rule from the audit regulator, this time focused on quality control. The SEC approved the quality control standard with a 3-2 vote on Monday, Sept. 9.
The new standard will require all PCAOB-registered accounting firms to identify the specific risks that would inhibit audit quality — like the use of technology-based auditing tools that could create new risks if they don’t work as intended or are misused — and design a quality control system that includes policies and procedures to guard against those risks.
The standard would also require firms that audit more than 100 public companies annually to establish an external oversight function for the quality control system composed of one or more professionals who can “exercise independent judgment.” Read more.