Defining Issue | August 2019

SEC approves new PCAOB auditing standards

The new and amended standards strengthen the requirements for auditing management’s accounting estimates and the auditor’s use of the work of specialists, including company specialists.


  • Audits of financial statements conducted in accordance with PCAOB standards, including audits of emerging growth companies and brokers and dealers.

Relevant dates

  • The new standards and related amendments will take effect for audits of financial statements for fiscal years ending on or after December 15, 2020.

Key impacts

The new standard for auditing accounting estimates, including fair value measurements, differs from the current requirements in several important ways. Among other things, the standard:

  • Better integrates the requirements for auditing accounting estimates with the PCAOB’s risk assessment standards;
  • Provides for a more uniform approach to testing accounting estimates and greater specificity regarding procedures expected to be performed by the auditor;
  • Places greater emphasis on the auditor’s consideration of potential management bias in accounting estimates; and
  • Introduces specific requirements for evaluating pricing information received from a third party (such as a pricing service, a broker or a dealer).

The new and amended standards for using the work of specialists strengthen the requirements for the auditor’s evaluation of the specialists’ work. For specialists engaged or employed by the company, the expanded requirements explicitly include:

  • Evaluating the reasonableness of all significant assumptions used by the specialist (whether developed by management or the specialist);
  • Evaluating whether the methods used by the specialist are appropriate under the circumstances; and
  • Testing the accuracy and completeness of company-produced data used by the specialist and evaluating the relevance and reliability of data from external sources that are used by the specialist. 

Report contents

  • Applicability
  • Why did the PCAOB adopt the new standards?
  • Auditing accounting estimates, including fair value measurements
  • Auditor’s use of the work of specialists
  • Effective date and implementation

Related content

PCAOB releases containing the new and amended auditing standards:



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