- Chief Compliance Officer and VP of Legal Affairs, Arrow Electronics
By 
Kyle Brasseur2023-03-21T16:49:00
The Securities and Exchange Commission (SEC) is paying added scrutiny toward audit firms’ increasing use of network affiliates in their work and the potential for inconsistent quality that comes with such an approach.
SEC Chief Accountant Paul Munter in a statement Friday emphasized the importance of the lead auditor’s role in ensuring quality and independence while citing a handful of enforcement actions brought by the Public Company Accounting Oversight Board (PCAOB) in 2022 against audit firms relying on the work of unregistered affiliates without proper documentation.
“An unregistered accounting firm causes a violation of PCAOB [rules] whenever it plays a substantial role in the audit of an issuer—irrespective of the audit engagement structure used by the lead auditor,” Munter said. “Any lead auditor should be aware of this requirement and safeguard against such violations in its use of other auditors during an audit engagement.”
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