The Public Company Accounting Oversight Board (the “PCAOB”) recently issued a concept release (the “Release”) soliciting public comment on potential changes to the auditor’s reporting model based on the concerns of investors and other financial statement users that the transparency and relevance of the financial statements and the audit process should be enhanced.1 Although the Release merely seeks comments and does not propose specific changes to the auditor’s report, if final rules in this area are adopted, they could alter the relationship between auditors and public company management and audit committees, including potentially affecting such matters as time and expense spent on the audit, the degree of candor in communications between companies and auditors and exposure to liability due to conflicting auditor and company views.

The Release outlines four PCAOB alternatives for potentially changing the auditor’s reporting model, based on the view that auditors often have significant information about a public company’s financial statements and the audit of the financial statements that is not currently addressed in the auditor’s report but which might be useful to investors and others. Comments on the Release are due September 30, 2011, and the PCAOB also intends to hold a public roundtable event in the third quarter of 2011 to discuss the matters addressed in the Release. The remainder of this client alert outlines these four alternatives.