Constituent Feedback on Audit Regulatory Policy: An Examination of PCAOB Comment Letters

• In Event: Evaluating the PCAOB, the instructor, the textbook, and the auditor.
  In Dialogue Session: Evaluating the PCAOB, the Instructor, the Textbook, and the Auditor.

Abstract

In developing its authoritative guidance, the Public Company Accounting Oversight Board (PCAOB) solicits and reviews constituent feedback on regulatory policies contained in its proposed auditing standards. Little research exists that describes the agency’s feedback environment or examines constituent preferences for those initial policies. In exploring constituent comment letters submitted to all eighteen finalized PCAOB audit standards, we find that constituent feedback is robust and consistent among four constituent groups – annually inspected accounting firms (Big Four and non-Big Four), peer regulators, and state societies. Examining 138 policy positions across thirteen of the PCAOB’s proposed audit standards, we find varying levels of support for and opposition to PCAOB regulatory policies across those constituent groups. We also discover that the agency revises approximately half of its policy positions in subsequent final authoritative guidance after receiving the feedback. These findings yield important theoretical and practical implications concerning the evolution of public company audit regulation.

Authors

• Tyler Williams, University of Mississippi

• W. Mark Wilder, University of Mississippi