More than four years after a Treasury committee urged the Public Company Accounting Oversight Board to consider a rule requiring audit engagement partners to sign their audit reports, the PCAOB is still not decided on whether or how it might require engagement partners to be identified.

The PCAOB recently updated its standard-setting agenda to indicate it will act sometime between April and September on a proposal first issued in October 2011 that would require audit firms to include the name of the engagement partner in audit reports. The October 2011 proposal represented a softening of the idea the PCAOB first floated in a July 2009 concept release asking for views on whether it should do as the Treasury Advisory Committee on the Auditing Profession recommended in 2008 and require engagement partners to sign the audit report.

The updated agenda says the PCAOB may adopt a standard to improve audit transparency by requiring disclosure of the engagement partner, or it may issue a new proposal. The agenda says the staff has completed its analysis of comments to the proposal, which ended in January 2012, and it is drafting revisions for the board's consideration.

The proposal has taken on heightened significance after a recent media blitz to determine who at KPMG was the engagement partner for Skechers and Herbalife when those companies announced KPMG withdrew a total of five years worth of audit work because the engagement partner was under investigation for insider trading. Although KPMG declined initially to identify the partner, it soon confirmed media reports that the partner in question was Scott London, the now former head of the firm's Los Angeles audit practice and engagement partner for Skechers and Herbalife. The Department of Justice and the Securities and Exchange Commission have both announced charges against London.

The Treasury committee recommended the PCAOB consider requiring engagement partners to sign the audit report because it believed it would add transparency and accountability to the audit. When the PCAOB proposed it in 2011, the audit profession largely objected.

Cindy Fornelli, exeuctive director of the Center for Audit Quality, supported largely by the major audit firms, told the PCAOB she believed the identification of the engagement partner would not improve accountability, but instead would potentially increase liability for auditors. “Engagement partners are already held accountable to multiple parties,” she wrote, including their firm, audit committees, regulators, and investors. “These multiple layers of accountability provide a significant incentive for engagement partners to conduct high quality audits in accordance with professional standards,” she wrote.

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