What Is PCAOB Auditing Standard AS 1297?
Understand how PCAOB AS 1297 enhances audit transparency by requiring public disclosure of the specific engagement partners and firms behind a public company audit.
The Public Company Accounting Oversight Board (PCAOB) established Auditing Standard 1297 to increase the transparency of public company audits. This standard was developed in response to a desire for greater accountability from investors and the public regarding who performs financial reviews. The core purpose is to lift the veil of anonymity that previously surrounded the individuals and firms responsible for an audit. By making this information public, the PCAOB provides investors with more data to consider when evaluating a company’s financial oversight, pinpointing the specific individuals and other firms involved.
Key Disclosure Requirements
The standard mandates two primary categories of disclosure. The first is the identification of the engagement partner, the individual with primary responsibility for the audit engagement and for signing off on the final audit report. Naming this person directly assigns a clear point of accountability for the quality and integrity of the audit, moving beyond the generic signature of the accounting firm.
A second disclosure involves identifying other independent public accounting firms that participated in the audit. If another firm performs at least 5% of the total audit hours, the primary audit firm must disclose its name, city, state, and the specific percentage of total audit hours contributed. For any other accounting firms whose individual participation falls below the 5% threshold, the primary auditor must report the aggregate number of such firms and the combined percentage of their total audit hours.
Understanding Form AP
To facilitate these disclosures, the PCAOB uses a specific document, Form AP, Audit Participants and Metrics, which must be filed for each public company audit. This form is the official vehicle that registered public accounting firms must use. The filing deadline is within 35 days after the audit report is first included in a company’s filing with the Securities and Exchange Commission (SEC). For initial public offerings, this window is shortened to 10 days.
The form details the audit participants and new engagement-level metrics. This includes the full name of the engagement partner, a unique Partner ID, and a list of other participating firms that met the 5% threshold. The form also requires their locations and percentage of audit hours, providing further insight into the engagement.
How to Access Audit Participant Information
The PCAOB makes accessing the information from Form AP filings straightforward for the public through a dedicated online tool. This information is consolidated into a free, searchable database called AuditorSearch, which is available on the PCAOB’s website. This database serves as the central repository for all Form AP filings, allowing any interested party to look up details on audit participants for publicly traded companies.
Using the AuditorSearch database, a user can initiate a search using several different criteria. The most common search methods are by the public company’s name or its stock ticker symbol. One can also search by the name of the audit firm or the specific name of an engagement partner to see all the audits they have been associated with. The system then returns the relevant Form AP filings for viewing.
The “percentage of total audit hours” field gives a clear indication of how much of the audit work was handled by other firms, which can be an important piece of information for understanding an audit’s complexity. For example, a high percentage of hours attributed to other firms in various international locations might indicate that the company has significant global operations. This allows investors and analysts to gain a more nuanced view of the audit process for a particular company.