If your company is planning to go public, has recently listed, or files with the SEC in any capacity, you've likely come across the term "PCAOB audit." Understanding what it means, and why it's non-negotiable for public companies, is one of the first things growth-stage finance teams need to get right.
PCAOB Audit, Defined
A PCAOB audit is a financial statement audit performed by a firm registered with the Public Company Accounting Oversight Board (PCAOB), conducted in accordance with PCAOB auditing standards rather than the AICPA standards used for private company audits. The PCAOB was created by the Sarbanes-Oxley Act of 2002 to oversee the audits of public companies and protect investors by ensuring audit quality and auditor independence.
In practical terms: if your company is an SEC registrant, whether through an IPO, a SPAC merger, or an existing listing, your audit must be performed by a PCAOB-registered firm, and that firm is itself subject to periodic PCAOB inspection.
How a PCAOB Audit Differs From a Private Company Audit
Private company audits are typically performed under AICPA Generally Accepted Auditing Standards (GAAS). PCAOB audits differ in several important ways:
Auditor independence rules are stricter. PCAOB standards impose tighter restrictions on non-audit services an audit firm can provide to its public company clients.
Internal control testing is often required. Depending on filer status, PCAOB audits may include an attestation on internal control over financial reporting (ICFR) under SOX Section 404(b), not just an opinion on the financial statements.
The audit firm is subject to inspection. The PCAOB periodically inspects registered firms' audit files to assess quality, which creates an added layer of accountability that doesn't exist in the private company audit market.
Reporting standards are more prescriptive. PCAOB auditing standards are more detailed in areas like critical audit matters (CAMs), which must be communicated in the auditor's report for many issuers.
Who Needs a PCAOB Audit
Companies filing an S-1 registration statement ahead of an IPO
SPACs, at formation and throughout the SPAC lifecycle, and target companies going through a de-SPAC transaction
Companies already listed on Nasdaq, NYSE, or other U.S. exchanges
Foreign private issuers filing with the SEC
Companies with public debt or other SEC reporting obligations, even without listed equity
What to Expect During the Process
A PCAOB audit generally follows a structured path: planning and risk assessment, testing of internal controls (where applicable), substantive testing of account balances and transactions, and issuance of the auditor's opinion alongside your financial statements. For first-time filers, the planning phase often takes longer, since the audit team is establishing risk assessments and control reliance for the first time, which is why starting the audit relationship well before a target filing date matters.
Choosing a PCAOB-Registered Firm
Not every audit firm is PCAOB-registered, and not every PCAOB-registered firm has deep experience with growth-stage or newly public issuers. When evaluating firms, look for independent PCAOB registration (rather than working through another firm's registration), direct experience with SEC registrants in your filer category, and a team structure where partners, not just staff, are actively involved in your engagement.
Where PCAOB Audits Fit Into Your Broader Compliance Program
A PCAOB audit doesn't exist in isolation; it connects directly to your internal controls environment and your SOX compliance program. Strong controls make for a more efficient audit; weak ones create delays and added cost.
Work With a Partner-Led PCAOB Audit Team
MBP Global is independently registered with the PCAOB and has directed SEC audit engagements across more than 50 industries, from IPO-stage companies to NYSE and Nasdaq-listed issuers.
