The issue

The PCAOB wants to make its quality control standard, QC 1000, easier to operate, scale, and implement, while still protecting audit quality and investors. This is also a chance to cut regulatory burdens that discourage firms from doing public company audits.

The PICPA generally supports the amendments and wants the PCAOB to go further with a more principles-based, risk-focused approach that gives firms of all sizes more flexibility, without discouraging market participation. Specifically, the PICPA supports:

• Dropping the "design-only" requirement
• Letting firms assign QC responsibilities to qualified internal/external specialists and split duties among multiple people
• Dropping the EQCF requirement
• Redefining "engagement deficiency" to include materiality, relevant assertions, and professional judgment (closer alignment with ISQM 1)
• Letting firms pick their own evaluation date, and extending the reporting deadline for small/mid-size firms from 60 to 180 days
• Keeping the graduated evaluation framework (opposing a binary "effective/not effective" model), in line with ISQM 1
• Shortening document retention from 7 to 5 years
• Narrowing documentation requirements to focus on significant quality management matters, using a risk-based approach

You can see our full comment letter here.

Read what Allison Henry, VP of Professional and Technical Standards, had to say in Bloomberg here.