SEC Chief Accountant Issues Statement on Public Company Audit Quality

On February 5, 2024, Securities and Exchange Commission (SEC) Chief Accountant Paul Munter issued a statement calling for increased quality of public company audits. Munter’s statement follows findings from the Public Company Accounting Oversight Board (PCAOB) of increased deficiency rates in recent year-over-year inspections, and alludes to new and existing risks that “may put pressure on the operations and financial health of companies and render financial reporting and auditing more challenging.”

In his statement, Munter addresses responsibilities of audit committees and independent auditors in protecting the investing public and provides suggestions for each.

Munter’s comments suggest an increased focus by the SEC on public company audit quality, and particularly areas that have been identified by the PCAOB as having the highest rates of deficiency, including auditor testing of management review controls, auditors’ selection of controls to test, and auditors’ selection of controls over the completeness and accuracy of information used in the operation of the controls.

Winston’s Capital Markets and Securities Law Watch will continue to monitor the SEC’s positions on public company audit quality and will post additional updates as they become available.