As preparers wrap up their year-end financial reports, they'll have a few extra weeks to make their views known on a proposal to begin naming engagement partners in the audit report.

The Public Company Accounting Oversight Board has set a new comment letter deadline of March 17 to submit feedback on a proposed auditing standard meant to give investors more information on exactly who supervises and performs an audit. The proposal would require audit firms to name in the audit report the engagement partner who oversees the audit, plus the names of any outside audit firms that the principal auditor relied on to do the audit work, such as a network firm in another jurisdiction, for example. The report would include the percentage of the total audit hours performed by the outside firm, and it would identify any other individuals or firms not employed by the audit firm who performed audit procedures that contributed to the ultimate audit opinion.

The PCAOB first proposed the idea of naming the engagement partner in 2009, initially looking for views on whether the engagement partner should sign and certify the report much the way CFOs and CEOs certify financial statements after Sarbanes-Oxley. The board heard an outcry of concern that signing the report would expose engagement partners to additional liability. The board issued its first rule proposal in 2011 focusing on identifying engagement partners rather than eliciting their signature, yet protests over liability continued. Many auditors proposed disclosure in a separate filing to the PCAOB rather than directly in the audit report. Auditors, audit committee members, and companies have questioned whether the PCAOB can show that audit quality will improve under the naming requirement.

A sharply divided PCAOB proposed the standard once more in late 2013 to try again at gaining some consensus that naming the engagement partner and including information on others outside the firm who contributed to the audit would improve auditing. “Disclosure of the name is sufficient to achieve enhanced accountability and to allow investors to judge the engagement partner's record,” said PCAOB Chairman James Doty as the board issued the latest proposal. “I continue to think the compromise reflected in choosing the disclosure alternative is modest and appropriate. I also believe it is right to provide the disclosure in the audit report itself. The audit report goes straight to investors, as does the request to vote to ratify appointment of auditors, so why shouldn't the attendant disclosure?”

PCAOB members Jeanette Franzel and Jay Hanson made clear they don't agree with the proposal, concerned about unintended consequences and the lack of any convincing evidence that the disclosures would achieve the intended objective.