On August 7, 2023, the Center for American Progress submitted comments to the Public Company Accounting Oversight Board (PCAOB) regarding the board’s proposed amendments to auditing standards related to a company’s noncompliance with laws and regulations. Independent audits of public companies are intended to provide investors with reasonable assurance that a company’s financial statements are free of material misstatement, whether due to error or fraud. Dozens of cases of audit failure since the PCAOB’s last revision of the standards in 1988 have demonstrated that the existing standards are inadequate and that investors may be relying on material misstatements stemming from noncompliance with laws and regulations.
In its letter, CAP expresses support for the amendments, which provide long-overdue updates and beneficial enhancements to the standards. In addition, CAP recommends several provisions that would further strengthen the rules, primarily aimed at requiring auditors to consider misstatements arising from climate- and sustainability-related laws and regulations.
Click here to read CAP’s comment letter.