PCAOB and AICPA Audits | Themis Partner Malaysia

Understanding the PCAOB and AICPA audits differences

The PCAOB and AICPA audits are two important types of audits used in Malaysia to ensure the accuracy and compliance of public company financial statements. While both audits are designed to provide assurance on financial statements, they have different regulatory frameworks and standards. The PCAOB audit is required for companies listed on U.S. stock exchanges, while the AICPA audit is more commonly used for private companies.

Additionally, the PCAOB audit focuses on specific areas such as internal controls, while the AICPA audit provides a more general assessment of the financial statements.

Differences between PCAOB and AICPA auditing standards and practices

The PCAOB and AICPA audits differ in terms of their auditing standards and practices.

➤ The PCAOB sets its own auditing standards, which are separate from the generally accepted auditing standards (GAAS) used by the AICPA. The PCAOB standards are more prescriptive and require auditors to follow a specific methodology, including testing of internal controls over financial reporting.

➤ On the other hand, AICPA standards are more principles-based and provide auditors with more flexibility in how they approach an audit engagement. In terms of audit reporting, the PCAOB requires auditors to issue a separate report on internal controls, while the AICPA includes information on internal controls in the audit opinion.

Ask our experts to determine which audit type is best suited for your business needs.

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Public vs. Private company audits

In Malaysia, the PCAOB and AICPA audits have different applications depending on whether the company is public or private.

For public companies, the PCAOB audit is required by the U.S. Securities and Exchange Commission (SEC) and focuses on ensuring that the company’s financial statements comply with U.S. Generally Accepted Accounting Principles (GAAP) and the Sarbanes-Oxley Act.

Private companies, on the other hand, may use either the PCAOB or AICPA audit, with the AICPA audit being more commonly used. The AICPA audit focuses on providing assurance on the financial statements in accordance with GAAS, which are principles-based standards developed by the AICPA.

How to choose between a PCAOB or AICPA audit?

Choosing between a PCAOB or AICPA audit in Malaysia depends on various factors, including the company’s size, industry, regulatory requirements, and investor expectations.

1. Public companies listed on U.S. stock exchanges are required to undergo a PCAOB audit, while private companies can choose between the PCAOB and AICPA audit.

2. The PCAOB audit is more prescriptive and may be beneficial for companies with complex internal controls or those seeking to comply with U.S. regulatory requirements.

3. The AICPA audit, on the other hand, is more principles-based and may be suitable for companies that do not have significant regulatory requirements or complex internal controls.

4. Ultimately, the choice between a PCAOB or AICPA audit should be based on the company’s specific needs, goals, and regulatory requirements.

PCAOB and AICPA audits differences on financial reporting and compliance

Opening a corporate bank account

One of the key differences between the PCAOB and AICPA audits in Malaysia is their focus on financial reporting and compliance. The PCAOB audit is designed to ensure compliance with U.S. GAAP and the Sarbanes-Oxley Act, which includes requirements for internal control over financial reporting. In contrast, the AICPA audit focuses on providing assurance on the financial statements in accordance with GAAS.

While both audits assess the accuracy of financial statements, the PCAOB audit may be more suitable for companies seeking to comply with U.S. regulatory requirements, while the AICPA audit may be more appropriate for companies that do not have significant regulatory requirements.

In conclusion, while both the PCAOB and AICPA are involved in auditing and financial reporting, there are significant differences between the two organizations. The PCAOB primarily focuses on auditing public companies, while the AICPA provides guidance for all types of audits. Additionally, the PCAOB has more regulatory authority and stricter standards than the AICPA. Ultimately, understanding the differences between the two organizations is essential for ensuring that financial statements are accurate, reliable, and compliant with the applicable regulations. You can always contact our lawyers to help you choosing between these two audits.