SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67807; File No. PCAOB-2012-001]
Public Company Accounting Oversight Board; Notice of Filing of Proposed Rules on Auditing Standard No. 16, Communications With Audit Committees and Related and Transitional Amendments to PCAOB StandardsI. Board's Statement of the Terms of Substance of the Proposed Rules
On August 15, 2012, the Board adopted Auditing Standard No. 16,Communications with Audit Committees,related amendments to its interim auditing standards, and transitional amendments to AU sec. 380,Communication with Audit Committees,(collectively, "the proposed rules"). The text of the proposed rules is set out below.Auditing Standard No. 16Communications With Audit CommitteesIntroduction
1. This standard requires the auditor to communicate with the company'saudit committee
regarding certain matters related to the conduct of an audit2
and to obtain certain information from the audit committee relevant to the audit. This standard also requires the auditor to establish an understanding of the terms of the audit engagement with the audit committee and to record that understanding in an engagement letter.
2. Other Public Company Accounting Oversight Board ("PCAOB") rules and standards identify additional matters to be communicated to a company's audit committee (see Appendix B). Various laws or regulations also require the auditor to communicate certain matters to the audit committee.3
The communication requirements of this standard do not modify or replace communications to the audit committee required by such other PCAOB rules and standards, and other laws or regulations. Nothing in this standard precludes the auditor from communicating other matters to the audit committee.Objectives
3. The objectives of the auditor are to:
a. Communicate to the audit committee the responsibilities of the auditor in relation to the audit and establish an understanding of the terms of the audit engagement with the audit committee;
b. Obtain information from the audit committee relevant to the audit;
c. Communicate to the audit committee an overview of the overall audit strategy and timing of the audit; and
d. Provide the audit committee with timely observations arising from the audit that are significant to the financial reporting process.
Kevin M. O'Neill,