The IMA® (Institute of Management Accountants) Financial Reporting Committee (FRC or Committee) issued a comment letter in response to the Public Company Accounting Oversight Board (PCAOB or Board) Release No. 2022-0001, Request for Public Comment, Advisory Groups—Draft Governance Frameworks.
In January 2022, the PCAOB voted to establish two new groups: the Investor Advisory Group (Proposed IAG); and the Standards and Emerging Issues Advisory Group (Proposed SEIAG). The goal of establishing these groups is to obtain feedback from investors and other stakeholders regarding the work of the PCAOB. The released materials include proposed initial governance documents to establish the groups and specify interaction with the Board.
In its response, the FRC expresses its strong support of the establishment of these groups and notes the benefits of similar advisory groups in the past. However, the FRC raises certain concerns about the structures and processes of the proposed groups, including the following:
- The potential for the investor group to lack a depth of understanding of auditors’ responsibilities and processes,
- The preponderance of investor input through the Proposed IAG in comparison to the input of the Proposed SEIAG, and
- The scheduling of meetings so that issues raised by stakeholders are considered appropriately.