The PCAOB has published guidance to assist firms with the disclosure of the names of engagement partners and other firms that participated in an audit using new Form AP. The guidance includes information on assigning engagement partner identification numbers and estimating the audit hours for the work performed by other audit firms. Firms are required to report the engagement partners on Form AP for audit reports issued on or after January 31, 2017 and the names of other audit firms on or after June 30, 2017.
Form AP file dates. Form AP is required to be filed the 35th day after an audit report is first included in a document filed with the SEC, unless the first document is a registration statement filed under the Securities Act, in which case Form AP must be filed by the 10th day. The inclusion of the same audit report in a subsequent filing will not require another filing of Form AP. However, if changes are made to the audit report, a new Form AP must be filed when the revised report is included in a document filed with the SEC. Form AP is not required for attestation engagements, reports issued for interim reviews, and non-issuer audits conducted in accordance with PCAOB standards.
Amending Form AP. Amendments to Form AP are required to correct information that was incorrect when the form was filed or to provide required information that was omitted when the form was filed. The guidance cautions that inaccuracies or omissions may result in disciplinary sanctions, so it is in a firm’s interest to correct any errors as soon as possible. Amendments are not necessary to update information that was correct at the time of the filing. If an audit report is reissued and dual-dated, a new Form AP is required.
ID numbers. Firms must assign a unique 10-digit ID to each partner who serves as an engagement partner for issuer audits. The number must begin with the firm’s own unique five-digit identifier, which is assigned when the firm registered with the PCAOB, followed by a series of numbers of the firm’s choosing.
Other participating firms. Other accounting firms that participated in the audit must be disclosed, with exclusions for the engagement quality reviewer, specialists engaged but not employed by the auditor, internal auditors, and certain others outlined in the rules. The firm filing the Form AP must compute the extent of participation of the other accounting firms as a percentage of total hours. Non-accounting firms, such as shared service centers or tax consulting firms, are not identified on Form AP, but their hours incurred in the audit should be included in the computation of total audit hours and allocated among the principal auditor and the other accounting firms.
Actual audit hours should be used if available, but if not, firms may use a reasonable method to estimate the hours. For every firm that participated in the audit and contributed 5 percent or more of the total audit hours, the Form AP must include the legal name, address of the headquarters, firm ID where applicable, and percentage of total audit hours. Firms that contributed less than 5 percent of the total audit hours may be included with the number of total firms that individually contributed less than five percent of the total audit hours.
Voluntary disclosure in audit reports. In addition to filing Form AP, auditors may include the engagement partner and other participants’ information in their audit reports. If the auditor includes information about the other accounting firms in the audit report, it must include all firms that are required to be disclosed on Form AP. This voluntary disclosure does not have to include the partner and firm IDs.
The guidance also includes information about the mechanics of reporting through the PCAOB system and contact information for those needing assistance.
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