New Auditor's Report

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Overview

What was changed?

The new auditing standard retained the pass/fail opinion of the existing auditor's report, but made
significant changes to the auditor's report, including:

Communication of critical audit matters—matters communicated or required to be communicated to the

audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements;
and (2) involved especially challenging, subjective, or complex auditor judgment.

Disclosure of auditor tenure—the year in which the auditor began serving consecutively as the company's
auditor.

Other improvements to the auditor's report—a statement that the auditor is required to be independent,
changes to certain standardized language in the auditor's report, and changes to the standardized form of the
auditor's report.

Additional information on the new auditing standard:

SEC Action: Release No. 34-81916

Auditing Standard: AS 3101: The Auditor's Report on an Audit of Financial Statements When the Auditor
Expresses an Unqualified Opinion

Adopting Release: PCAOB Release No. 2017-001

Fact Sheet: Adoption of an Auditing Standard on the Auditor’s Report

Why did the PCAOB adopt this standard?

The PCAOB adopted the standard to make the auditor's report more relevant to investors
and other financial statement users by requiring more information about the auditor and the
audit.
Resources and Tools for Implementation

Staff Guidance

The PCAOB staff provided guidance on provisions other than CAMs in the revised auditor's report.
The guidance was updated as of August 23, 2018. Staff may update this guidance as needed.

◾ Staff Guidance – Changes to the Auditor's Report Effective for Audits of Fiscal Years Ending on or After Dec. 15,
2017 (updated Aug. 23, 2018)

◾ Annotated Example Auditor’s Report for the Audit of a Broker or Dealer (Dec. 18, 2018)

Webinar

Our standard-setting professionals also provide information through educational webinars.

The PCAOB staff held a webinar in January 2018 and provided an overview of the changes to the auditor’s report
that became effective in December 2017.

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 What will the PCAOB evaluate in the near future?

Assessing Initial Implementation of CAMs

Once the initial implementation of CAMs begins, the PCAOB will assess stakeholders’ experiences and results, and
determine whether we need to take further action.

The staff will engage with stakeholders, including auditors, investors, financial statement preparers, and audit committee
members, through requests for comment, interviews, surveys, and other outreach to learn about their experiences.

Evaluating Overall Impact

After a reasonable period of time following full implementation of the standard, the PCAOB will conduct a post-
implementation review to analyze the effectiveness of the new requirements.

The staff will reevaluate the costs and benefits of the new standard, including any unintended consequences, to
understand the overall impact on the audit profession, public companies, and users of financial statements.

How do I contact the PCAOB?

Phone: (202) 591-4395

Form: Contact Us

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