The PCAOB’s new amendments are subject to approval by the Securities and Exchange Commission (SEC). Credit: chaylek/Shutterstock.

The US Public Company Accounting Oversight Board (PCAOB) has set new requirements for the public reporting of standardised company and engagement metrics.

It has also made amendments to modernise the PCAOB’s framework for collecting information from audit companies to enhance their transparency as well as oversight in the accountancy sector to protect investors.

Public accounting practices registered with the PCAOB that audit issuers classified as either accelerated filers or large accelerated filers will now need to publicly report specified metrics related to their audits and practices.

These metrics span eight areas: allocation of audit hours, audit personnel experience, industry experience, partner and manager involvement, personnel retention, restatement history, training hours and workload at the company level.

Annual reporting of company-level metrics will be required on a new form firm metrics (FM) for companies that serve as the lead auditor for at least one accelerated filer or large accelerated filer.

Engagement-level metrics for audits of these filers will be reported via a revised form AP, now titled ‘Audit Participants and Metrics’.

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Additionally, companies may provide limited narrative disclosures on both forms to contextualise the metrics.

The PCAOB has responded to stakeholder input by reducing the metric areas from 11 to eight, refining the metrics for clarity and allowing for more optional narrative disclosure.

A phased implementation approach has been established, giving smaller companies additional time to comply.

The amendments also modernise the PCAOB’s annual and special reporting requirements, facilitating more complete and timely information disclosure by registered public accounting companies.

Registered companies will now be required to report additional fee information, governance details and network relationships on the PCAOB’s public annual report form (form 2) and the special reporting form (form 3).

Significant cybersecurity events must also be reported confidentially to the PCAOB.

The PCAOB’s amendments, which are subject to approval by the SEC, will become effective in stages if approved.

PCAOB chair Erica Y Williams said: “Sound and consistent information strengthens investor confidence and can drive audit quality.

“The new requirements we are adopting today will make PCAOB oversight more effective and equip investors, audit committees and others with clear, consistent, and actionable data related to audit firms and the engagements they perform.”

In June 2024, the PCAOB updated PCAOB Rule 3502 to hold associated persons accountable when they negligently, directly and substantially contribute to companies’ violations.