FOR IMMEDIATE RELEASE

August 20, 2024

CONTACT
Carter Dougherty
carter@ourfinancialsecurity.org

SEC Approves Updated General Responsibilities of Auditors

Washington, D.C. — The Securities and Exchange Commission (SEC) approved a new standard from the Public Company Accounting Oversight Board (PCAOB) that clarifies the “General Responsibilities” of an auditor in conducting a public company audit.

Auditors must assure that a company’s financial statements “present fairly” the company’s financial position, which under the new standard requires that:

• “[I]nformation is presented and classified appropriately and in a manner that is not misleading,”
• “The accounting principles selected and applied by the company’s management are appropriate in the circumstances;” and
• “Company transactions and relevant events and conditions are appropriately recognized, measured, and disclosed in financial statements.”

“With this move, the SEC and PCAOB have taken a small but important step towards reaffirming the auditor’s fundamental obligation: guaranteeing that financial statements reflect the company’s actual financial position,” said Natalia Renta, senior policy counsel for corporate governance and power at Americans for Financial Reform Education Fund. “When companies try to paint a rosier, misleading financial picture while in technical compliance with GAAP rules, it’s the job of the auditor to step in and require reporting that matches reality.”

AFREF and Public Citizen submitted a comment to the PCAOB on the proposed standard.

The SEC also approved two other important PCAOB actions around individual contributory liability for violations and technology-assisted electronic form audit procedures.

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