CPA Journal, April 2024
On June 6, 2023, the PCAOB published an exposure draft requesting comments about the auditor’s role with respect to noncompliance with laws and regulations (NOCLAR). The exposure draft (“Amendments to PCAOB Auditing Standards related to a Company’s Noncompliance with Laws and Regulations,” https://pcaobus.org/about/rulesrulemaking/rulemaking-dockets/docket-051) is extensive in its potential scope and requirements. If adopted as drafted by the PCAOB and approved by the SEC, the guidance will require auditors to perform procedures to identify circumstances of NOCLAR, assess the impact of such events on the financial statements, and evaluate whether material and relevant NOCLAR events have been disclosed in the financial statements. It is worth noting that, since 2017, firms have been required to report on NOCLAR in accordance with the International Code of Ethics for Professional Accountants as issued by the International Ethics Standards Board for Accountants (IESBA)..
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