During November 2024, the Public Company Accounting Oversight Board (PCAOB) approved new metrics reporting rules that would have required audit firms to publicly report detailed firm and engagement metrics. These new reporting rules were withdrawn on 12 February 2025, follows strong opposition from the AICPA and other stakeholders in the accounting profession.

Why Were These Rules Introduced?

The PCAOB initially proposed these rules as part of an effort to increase transparency and audit quality. The goal was to provide investors, regulators, and the public with more insight into how audits are conducted and whether firms were meeting professional standards.

These metrics were intended to:

• Help stakeholders assess audit quality and consistency across firms.

• Identify potential risks in the audit process, such as excessive workloads or lack of oversight.

• Ensure firms were properly staffed and trained to conduct high-quality audits.

• Encourage firms to maintain strong internal quality control processes.

However, the American Institute of Certified Public Accountants (AICPA) and others raised concerns that these rules would place an undue burden on audit firms, particularly small and midsized firms, potentially driving them out of the public company audit space.

What Were the Proposed Metrics for Reporting?

If implemented, audit firms would have had to report eight key metrics, including:

1. Engagement hours breakdown – a detailed report on how audit hours were divided among partners, managers, and staff.

2. Staffing and training data – information on auditor experience, ongoing training programs, and firm-wide professional development.

3. Work performed by offshore teams – a breakdown of how much audit work was outsourced to offshore firms or foreign affiliates.

4. Audit partner workload – the number of audits each partner was responsible for to assess whether they had adequate time and oversight for each engagement.

5. Quality control metrics – how firms monitored and improved audit quality internally, including how often audits were reviewed before finalisation.

6. Restatement rates – the frequency companies had to revise financial statements after an audit, which could indicate weaknesses in audit procedures.

7. Audit deficiencies – findings from PCAOB inspections detailing how often audits failed to comply with standards.

8. Use of specialists – data on how often firms engaged industry experts (e.g., IT, forensic, or tax specialists) to strengthen audits.

Why Were the Rules Withdrawn?

The AICPA and audit firms warned that these new requirements would:

• Increase compliance costs and administrative burdens.

• Make it harder for smaller firms to compete, potentially forcing them to exit public company audits.

• Discourage firms from taking on public clients due to the additional regulatory oversight.

• Provide limited benefits to investors while creating significant operational challenges.

The AICPA had previously urged the SEC to reject the rules and had consistently argued that increased audit transparency should not come at the expense of firm viability. The withdrawal of the rules was therefore welcomed.

What Happens Now?

With the withdrawal of the proposal, audit firms will not need to comply with the additional reporting requirements. However, the PCAOB is expected to continue exploring alternative ways to enhance audit oversight, meaning further regulatory changes may still be on the horizon.