Question

What are the three levels of responsibility defined in PCAOB Rule 3101? What are the words that may be used (such as “must” and “should”) within the guidance to indicate these types of responsibility?

Answer 1

Solution:-

PCAOB Rule 3101, sets forth three degrees of auditor responsibility based on the word usage in PCAOB audit standards as follows:-

Unconditional Responsibility: The words “must,” “shall,” and “is required” indicate unconditional responsibilities. The auditor must fulfill responsibilities of this type in all cases in which the circumstances exist to which the requirement applies.

Presumptively Mandatory Responsibility: The word “should” indicates responsibilities that are presumptively mandatory. The auditor must comply with requirements of this type specified in the Board's standards unless the auditor demonstrates that alternative actions he or she followed in the circumstances were sufficient to achieve the objectives of the standard.

Responsibility to Consider: The words “may,” “might,” “could,” and other terms and phrases describe actions and procedures that auditors have a responsibility to consider.