The Public Company Accounting Oversight Board approved a new advisory group aimed at giving investors and other stakeholders more opportunities to engage with the audit overseer.
By a unanimous vote on Monday, the five members of the board approved the creation and the charter of the 18-member Standards Advisory Group.
According to the advisory group’s charter, it will include five seats for representatives for the investor community, four for audit professionals, and three seats each for audit committee members or directors, financial reporting oversight personnel, and academics or others with specialized knowledge. All members will serve two-year terms.
In the recent past, the PCAOB has been working on increasing stakeholder engagement. “Building on our concerted effort to improve our outreach over the last several years, we are now taking the PCAOB’s engagement to a higher level by creating a new, more effective structure for the board to receive advice from our stakeholders on key PCAOB initiatives,” Chairman William Duhnke, said in a statement. “The formation of the Standards Advisory Group extends the dialogue we’ve advanced with investors and others since 2018 and gives stakeholders additional and tangible opportunities to assist the board in accomplishing its mission.”
Most of the advisory group’s work is expected to involve specific tasks assigned to it by the board; among other things, it will advise the PCAOB on:
- Existing auditing and related attestation standards, quality control standards, ethics standards, and independence standards;
- Proposed standards;
- Potential new or amended standards; and,
- “Requested matters other than standards that are of significance” to the board.
“When the board first engaged in public outreach in connection with drafting our strategic plan, we heard loud and clear the need to significantly expand and improve our stakeholder engagement,” Duhnke said in a statement, adding that the structure of the board’s two other advisory bodies (the Standing Advisory Group and the Investor Advisory Group, both of which were dissolved on Monday) combined stakeholder outreach and expert advice in a way that was not very effective. “We concluded that the historical model was outdated and would not serve either us or our stakeholders well going forward. So, we determined to separate the board’s outreach from its efforts to receive advice, and to expand and improve how the board did both.”
“The approach that is embodied within the charter for the new group that we are approving today is new and different” from the PCAOB’s other advisory groups, board member Megan Zietsman said in a statement. “I think the smaller group will allow for more meaningful participation by individual members, and in particular investors. Through the tasking process, the board will be able to seek targeted and timely feedback on specific issues, in particular as they relate to our standard setting activities.”
The board expects to release details on the process for nominating individuals to serve on the advisory group soon.