The number of audit firms registered with the Public Company Accounting Oversight Board declined from 2019 to 2020, continuing a decade-long trend.
The PCAOB’s Annual Report for 2020, which was released Monday, noted that 1,726 public accounting firms are registered with the board. That’s off from 1,796 at the end of 2019, and down from a peak of just under 2,400 in 2010 and 2011.
The report also covered the board’s ongoing execution of the five-year strategic plan in launched in 2018; part of the plan includes being ready to respond to a changing environment, including emerging technologies – which came in handy when the board found itself facing the beginning of the COVID-19 pandemic.
“When the pandemic hit, we were prepared not only to transition our entire workforce to a remote environment, but also to adapt our oversight activities to address the financial reporting and auditing risks that arose out of the pandemic,” Chairman William Duhnke wrote in his introductory letter.
As detailed in the report, the PCAOB took a number of steps in response to the coronavirus, including:
- Enacting a 45-day relief period on firm inspections at the onset of the pandemic;
- Adjusting the inspection program to understand the impact of the crisis on audit firms;
- Refining its planned quality control procedures; and,
- Providing resources and guidance for audit firms in the form of staff spotlights.
Over the course of 2020, the board also released a new format for its inspection reports, which it said included “the most significant changes … in 15 years,” along with a guide to how to read the new reports. In addition, it released an interim analysis of the new critical audit matter requirements.