Difference and Similarities of PCAOB Audit and AICPA Audit
An audit is an essential part of business procedures for all types of companies. Most companies divide audits into two major categories: PCAOB audits and AICPA audits.
A professional audit firm in Malaysia is capable of performing all types of audits because they have a professional team of PCAOB auditors and AICPA auditors.
However, it is also important for the companies to understand the few differences between PCAOB audits and AICPA audits so that they can properly plan audits. Let’s start by discussing the basics of these audits one by one.
AICPA Audits
The AICPA is an old auditing method that was first introduced in the 1940s. These standards evolved over time and were adopted by companies around the world during the 1970s.
It deals with many different aspects of an audit, such as preparing for the CPA examination and setting specific audit standards for every type of company, including government agencies and non-profits.
Due to the complexities of an AICPA audit, it is typically quite challenging for a small business to deal with these different tasks. In such a situation, it is better to hire an audit firm in Malaysia that can handle auditing for every type and size of the company.
These audits are typically conducted by professional audit firms that are familiar with the best accounting and auditing standards implemented in different stages, such as audit planning, risk assessment, and reporting.
It is possible to conduct an AICPA audit on many different types of entities, such as private organizations, non-profit businesses, government agencies, and individuals.
The specific scope and purpose of the audit can vary depending on the nature of the entity, but the general AICPA auditing standards serve as a great framework for the auditors.
Overall, AICPA audits are a reliable option to assure stakeholders that the financial statements of a company are true and accurate by auditing different parts of the company.
However, it is important to note that the AICPA does not have enforcement authority, due to which the need for PCAOB audits arises.
PCAOB Audits
PCAOB audit is a much more intense audit because PCAOB auditors are likely to scrutinize each and every part of the company in it.
The entire purpose of the introduction of PCAOB audit standards in 2002 was to deal with the increasing number of accounting scandals. As a result, PCAOB was meant to restore investor confidence.
A significant benefit of the PCAOB auditing standards is that they are flexible and have a progressive nature in which they can be amended according to the financial environment.
It can also be said that PCAOB audits are more inclined toward an organization’s stakeholders and ensure maximum accuracy for the public. This is the reason why PCAOB audits are much more sensitive than AICPA audits.
Differences
Following are the key differences between PCAOB audits and AICPA audits:
- PCAOB is responsible for setting auditing standards for public companies, while AICPA offers professional standards for CPA members.
- PCAOB oversees the audits of public companies, while AICPA is a professional organization for CPAs without oversight powers.
- PCAOB auditors have to ensure public companies’ compliance with the auditing standards and rules via inspections. AICPA does not have enforcement authority.
- If a mistake is committed by an auditor during a PCAOB audit, the consequences are much higher than an AICPA audit due to the strict review procedures of PCAOB.
- Overall, PCAOB audits have much higher standards that have to be implemented with significant strictness.
Similarities
While there are differences between PCAOB audits and AICPA audits, there are also many similarities. Both PCAOB and AICPA audits require the same kind of planning procedures for smooth auditing and implementation of these standards.
The exact type of planning is heavily dependent on the specific company and its scale. Generally, these procedures involve analyzing the design of controls and determining whether they are actually implemented in the organization.
Both PCAOB and AICPA indicate that the evaluation of design and implementation has to be treated as more than just inquiry because inquiry alone is not enough for proper auditing.
The Role of PCAOB Auditors in Public Company Oversight
Public Company Accounting Oversight Board (PCAOB) auditors play a crucial role in maintaining the integrity and reliability of financial reporting in the United States.
Unlike AICPA (American Institute of Certified Public Accountants) auditors, who primarily oversee private company audits and non-public entities, PCAOB auditors are responsible for enforcing auditing standards for public companies and broker-dealers registered with the U.S. Securities and Exchange Commission (SEC).
Their work ensures that public financial disclosures are free from material misstatements, which is essential for protecting investors and maintaining confidence in capital markets (PCAOB, 2024).
Recent Regulatory Changes Impacting PCAOB Auditors
In September 2024, the SEC approved new PCAOB audit quality standards aimed at strengthening risk management practices within audit firms. The updated framework emphasizes the identification, management, and continuous monitoring of audit quality risks, ensuring that firms uphold rigorous oversight standards.
A significant aspect of these reforms is the heightened accountability of audit firm leadership, requiring them to actively demonstrate compliance with PCAOB regulations. The new rules are set to take effect in December 2025, marking a substantial shift in the expectations placed on PCAOB auditors and the firms they work with (Reuters, 2024).
Additionally, the PCAOB’s adoption of Auditing Standard (AS) 1206, which became effective in June 2022, has introduced stricter guidelines for audits involving multiple accounting firms. The new standard enhances coordination and accountability among lead auditors and other participating firms, ensuring that the quality of work across different jurisdictions remains consistent (PCAOB, 2023).
This change is particularly relevant for multinational companies and audit firms operating across borders, including those in Malaysia that serve U.S.-listed clients.
The PCAOB’s Increased Focus on AI and Audit Technology
Another critical area of development is the PCAOB’s growing emphasis on artificial intelligence (AI) and technology-driven auditing.
As audit firms increasingly incorporate machine learning, data analytics, and automation into their processes, the PCAOB has begun evaluating whether current regulations adequately address the risks and opportunities posed by these advancements.
The board has initiated research projects to assess how AI can improve audit quality while mitigating potential manipulation risks (WSJ, 2025).
Comparison: PCAOB Auditors vs. AICPA Auditors
While both PCAOB and AICPA auditors perform financial audits, there are distinct differences between their roles
Regulatory Oversight
PCAOB auditors operate under federal regulation (SEC & PCAOB), whereas AICPA auditors follow state-level and professional association guidelines.
Audit Standards
PCAOB auditors adhere to PCAOB Auditing Standards, while AICPA auditors follow Generally Accepted Auditing Standards (GAAS) issued by the AICPA.
Client Base
PCAOB auditors focus on public companies and broker-dealers, whereas AICPA auditors generally handle private companies, nonprofits, and government entities.
With increasing regulatory scrutiny, PCAOB auditors are facing tighter compliance requirements, enhanced risk assessment measures, and heightened expectations regarding the use of audit technology.
Why These Updates Matter
For audit firms in Malaysia that conduct PCAOB-compliant audits for U.S.-listed clients, these regulatory changes present new challenges and responsibilities.
Firms must ensure that their audit methodologies align with PCAOB’s updated risk management and technology assessment guidelines, particularly if they engage in cross-border audits with U.S. entities. Understanding these shifts is critical for maintaining compliance and building credibility with international clients (PCAOB, 2024).
All in all
The differences between PCAOB audits and AICPA audits originate from the independent requirements and PCAOB auditor’s reporting considerations set in SEC and PCAOB standards.
Yet, the majority of the audit standards stay the same in both PCAOB and AICPA. It is because PCAOB had initially adopted AICPA auditing standards as interim standards until it was ready to issue its own auditing guidance.
As a result, the core principles of these auditing standards are similar to a much greater extent than what many people believe.
