Issuer audits from a registered firm
PCAOB audits for public companies from a registered firm
Only a firm on the PCAOB register can prepare or issue the audit report behind a 10-K, an S-1 or a Form 10.
Read first
What companies get wrong about a PCAOB audit
- A 10-K, an S-1 and a Form 10 all need an issuer audit, and a GAAS audit does not meet that requirement. Companies usually find out at review.
- The internal control opinion is not owed by every filer, and some smaller filers buy one they do not need.
- The engagement partner is named publicly on an issuer audit, so the person signing your file is on record.
Who needs a PCAOB audit
Exchange listed issuers, companies filing an S-1 or a Form 10, and SEC registered broker-dealers all need one. Under section 102(a) of Sarbanes-Oxley, an unregistered firm cannot prepare or issue an audit report for an issuer, a broker or a dealer. The register is public.
Some statements appear inside an SEC filing without needing an issuer audit. Consolidation alone does not pull a subsidiary’s auditor into scope, unless the component auditor plays a substantial role in the parent's issuer audit, the test set out in PCAOB Rule 2100. A GAAS audit can be acceptable where none is required, per topic 1 of the SEC Financial Reporting Manual.
A year audited by an unregistered firm cannot carry the issuer audit inside a registration statement, so auditing before you check the register means paying for that year twice.
The test
Which audit your filing requires
An issuer audit is required for…
- Exchange listed issuers filing a 10-K.
- An S-1 or a Form 10.
- SEC registered broker-dealers.
- A substantial role in a parent's issuer audit.
No issuer audit required for…
- Filings that require no issuer audit.
- A subsidiary pulled in by consolidation alone.
Deliverables
What a PCAOB audit delivers
Four documents, three of them on every engagement.
Auditor's report
The opinion your filing carries, issued in the name of the registered firm.
Audited financial statements
Balance sheet, income statement, cash flows and the notes.
Management letter
A written note of the control weaknesses we found.
Internal control opinion, where it applies
Only for filers that owe the attestation under Section 404(b).
Who we audit
Companies we audit under PCAOB standards
Exchange listed issuers
The annual audit and the quarterly reviews beside it.
Companies going public
We audit the years your S-1 or Form 10 has to carry, and document them to withstand SEC review comments.
Reverse mergers and shells
We rebuild opening balances where the previous records cannot support them.
Foreign private issuers
20-F filers reporting under US GAAP or under IFRS as issued by the IASB.
Subsidiaries of SEC filers
Where the component auditor plays a substantial role in the parent's issuer audit.
Broker-dealer engagements and OTC reporting companies work to different filing calendars, so start on those pages instead.
How it differs
PCAOB vs AICPA: what changes in a public company audit
The testing is much the same as any other audit. What changes is who may sign the report, how much of the work has to be documented, and who can read the file afterwards.
Who signs: the firm must be on the register
An unregistered firm cannot issue the report behind the filing.
Who signs: the engagement partner is public
Registered firms file Form AP to disclose the engagement partner and any other firm that took part in an issuer audit, so the individual behind the signature is on the record.
What it costs: the internal control opinion
The auditor gives a second opinion on internal control over financial reporting, in the integrated audit described by AS 2201.
What it costs: documentation depth
The Board inspects registered firms and reads the working papers, so a file that would pass a private company audit is usually too thin here.
Which filers owe a SOX 404(b) internal control audit
Many smaller filers do not owe one. Section 404(b) attaches the attestation to accelerated and large accelerated filers, and the SEC's 2020 adopting release moved more smaller reporting companies out of that status. Emerging growth companies sit outside it for five years under the JOBS Act.
Float and revenue can point in opposite directions, and float is the one people read first. At $400 million of float but $90 million of revenue, a company stays a smaller reporting company and owes no 404(b) attestation. Settle your filer status before you sign a quote that prices one.
Annual report deadlines run 60 days for large accelerated filers, 75 for accelerated and 90 for non-accelerated. We settle your status before the engagement letter, and where the attestation is owed we say so while the documentation is cheap to fix.
Prior year signed by an unregistered firm?
Send us the report and we will tell you whether that year stands.
How it works
The six steps of a PCAOB audit
- 01Step 1
Independence and scope check
Who owns you, what else we would do for you, and which standard applies.
- 02Step 2
Quote
Priced against filing type and annual gross revenue, read from your draft statements.
- 03Step 3
Engagement letter and request list
One list, worked backwards from the filing date.
- 04Step 4
Risk assessment
Where a misstatement would come from in your business, which decides the testing.
- 05Step 5
Fieldwork
Testing, reconciliation, third party confirmations, and control walkthroughs where the integrated audit applies.
- 06Step 6
Opinion and management letter
The signed report for your filing, plus the written note of control weaknesses.
Scoping
What drives the cost of a PCAOB audit
Pricing is fixed against the file. Send us the draft statements and we will price it.
One boundary worth knowing before you call any firm: we cannot prepare the statements that our own audit will then cover. Where they are not ready, your team or another provider has to close them first.
In our words, and a client's
Auditor independence and working to a filing deadline
On auditor independence
“Anytime that we have a client that brings up a situation that we think is ethically incorrect or there's a possibility of some type of a rule that's broken, we immediately disengage... for license purposes... but also just for pure ethics too.”
George Dimov, CPA
Founder, Dimov Audit
On working to a securities deadline
“We engaged George Dimov for an inception audit on our tech startup in preparation for equity crowdfunding. George and his team were excellent at communications and extremely efficient. They committed to a 10 day process and completed the project in less than half the time.”
David Levine
Google review
Next steps
Related audit services
Broker-dealer audits
SEC compliance, Forms 10-K and 10-Q
Pink sheet audits
Financial statement audits
Attestation services
This page is general information, not advice for your circumstances. Whether a PCAOB audit applies turns on your filing status and your ownership, so speak to a CPA before acting on anything here.
Speak to the CPA who would sign your audit report
Companies often reach us because a filing date moved or a prior auditor fell through.
Contact
Connect with Dimov Audit
Our dedicated team is ready to assist you on your path to financial success.
24 Mercer St, 2nd Floor, Suite 214
New York, NY 10013
United States
Reviewed by George Dimov, CPA. Founder of Dimov Audit, the firm behind 500+ audit and attestation engagements across all 50 states.
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