1 This table describes the staff’s application of PCAOB registration requirements for an auditor whose report is included
in a filing with the SEC. There are instances, not included in the table, when a principal auditor will use the work of another auditor and take responsibility for the other auditor’s work. In these instances, the other auditor’s report is not included in the filing with the SEC. The determination of whether the other auditor must be registered with the PCAOB is made by reference to the Sarbanes-Oxley Act and the PCAOB’s rules. In all such instances the principal auditor is responsible for
performing the audit in accordance with PCAOB standards. 2 The term ‘issuer’ means an issuer (as defined in Section 3 of the 1934 Act), the securities of which are registered under Section 12 of that Act, or that is required to file reports under Section 15(d) of that Act, or that files or has filed a registration statement that has not yet become effective under the 1933 Act, and that it has not withdrawn. See Section 2(a)(7) of the Sarbanes Oxley Act and PCAOB Rule 1001. 3 The auditor of the financial statements of the non-issuer entity must be registered if, in performing the audit, the auditor played a “substantial role” in the audit of the issuer, as that term is defined in PCAOB Rule 1001(p)(ii). If the “substantial role” test is not met, the firm is not required to be registered. The inclusion or exclusion of such a report under S-X 2-05 does not affect this determination. 4 S-X 2-02 requires that the auditor’s report state the applicable professional standards under which the audit was conducted. Under S-X 1-02 an audit of the financial statements of an issuer means an examination by an independent accountant in accordance with the standards of the PCAOB. In the situation identified in the chart above, the view of the SEC staff is that the applicable professional standards in S-X 2-02, as applied to the other auditor’s report, relates to an issuer and, therefore, the other auditor’s report must refer to the standards of the PCAOB. 5 If a principal auditor is making reference to another auditor’s report on the financial statements of the non-issuer entity, the other auditor’s report must refer to the standards of the PCAOB. See footnote 4 above. If a principal auditor does not make reference to another auditor’s report on the financial statements of the non-issuer entity, the other auditor’s report need not refer to the standards of the PCAOB. 6 The entity is itself an issuer and so must comply with the rules applicable to issuers. What does an auditor have to do prior to issuing a report on internal control over financial reporting?The auditor must communicate, in writing, to management and the audit committee all material weaknesses identified during the audit. The written communication should be made prior to the issuance of the auditor's report on internal control over financial reporting.
Who is responsible for the reliability of the internal controls over financial reporting process of an entity according to the PCAOB?The PCAOB makes it clear that the CEO and CFO are responsible for the internal control over financial reporting and the preparation of the statements.
Who is responsible for the reliability of the internal controls over the financial reporting process?C) management is responsible for understanding and testing internal control over financial reporting. D) companies must use the COSO framework to establish internal controls. Of the following statements about internal controls, which one is least likely to be correct?
Which of the following concerning the auditor's report on internal control?Which of the following concerning the auditor's report on internal control over financial reporting is correct? A. The auditor's report contains an opinion on the effectiveness of internal control over financial reporting based on the auditor's independent work.
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Prior to issuing a report on internal controls over financial reporting, an auditor is required to:
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