SECURITIES AND EXCHANGE COMMISSION 

(Release No. 34-99060; File No. PCAOB-2023-02) 

December 1, 2023 

Public Company Accounting Oversight Board; Order Granting Approval of Auditing Standard 

Governing the Auditor’s Use of Confirmation

I. Introduction

On October 4, 2023, the Public Company Accounting Oversight Board (the “Board” or 

the “PCAOB”) filed with the Securities and Exchange Commission (the “Commission”), 

pursuant to Section 107(b)1 of the Sarbanes-Oxley Act of 2002 (“SOX”) and Section 19(b)2 of 

the Securities Exchange Act of 1934 (the “Exchange Act”), a proposal to adopt Auditing 

Standard (“AS”) 2310, The Auditor’s Use of Confirmation (AS 2310); rescind AS 2310, The 

Confirmation Process (AS 2310); and amend several other existing auditing standards 

(collectively, the “Amendments”). The Amendments were published for comment in the 

Federal Register on October 17, 2023.3 We received three (3) comment letters in response to 

the notice.4 This order approves the Amendments, which we find to be consistent with the 

requirements of SOX and the securities laws and necessary or appropriate in the public interest 

or for the protection of investors. 

1

 15 U.S.C. 7217(b).

2

 15 U.S.C. 78s(b).

3

 See Public Company Accounting Oversight Board; Notice of Filing of Proposed Rules on The Auditor’s 

Use of Confirmation, and Other Amendments to PCAOB Standards, Release No. 34-98689 (Oct. 5, 2023) 

[88 FR 71684 (Oct. 17, 2023)], available at https://www.sec.gov/rules/pcaob/2023/34-98689.pdf.

4

 We received comment letters from Deloitte & Touche LLP (Nov. 2, 2023), PricewaterhouseCoopers LLP 

(Nov. 6, 2023), and Gopal Krushna Panda (Nov. 6, 2023). Copies of the comment letters received on the 

Commission notice of the Amendments are available on the Commission’s website at 

https://www.sec.gov/comments/pcaob-2023-02/pcaob202302.htm. 
2 

II. Description of the Amendments

On September 28, 2023, the Board unanimously adopted the Amendments.5 The

Amendments are intended to strengthen and modernize the requirements for the confirmation 

process by describing principles-based requirements for all methods of confirmation, including 

paper-based and electronic means of communications. In addition, the new standard is more 

directly integrated with the PCAOB’s risk assessment standards by incorporating certain riskbased considerations and emphasizing the auditor’s responsibilities for obtaining relevant and 

reliable audit evidence through the confirmation process. This should promote investor 

protection by enhancing the quality of audits. The requirements contained within the 

Amendments are discussed further below. 

A. Changes to PCAOB Standards 

Among other things, the Amendments enhance the existing confirmation requirements 

by: 

• Including principles-based requirements that are designed to apply to all methods of 

confirmation. These methods include longstanding practices, such as the use of paperbased confirmation requests and responses sent via regular mail; methods that involve 

electronic means of communications, such as the use of email or an intermediary to 

facilitate direct electronic transmission of confirmation requests and responses; and 

methods that have yet to develop. 

• Expressly aligning the requirements for the auditor’s use of confirmation with the 

requirements of the Board’s risk assessment standards, including AS 1105. The 

5

 See The Auditor’s Use of Confirmation, and Other Amendments to PCAOB Standards, PCAOB Release 

No. 2023-008 (Sept. 28, 2023), available at https://assets.pcaobus.org/pcaob-dev/docs/defaultsource/rulemaking/docket_028/2023-008_confirmation-adopting-release.pdf?sfvrsn=e18cef74_4. 
3

Amendments specify certain risk-based considerations and emphasize the auditor’s 

responsibility to obtain relevant and reliable audit evidence when performing 

confirmation procedures.6

• Strengthening the requirements for the use of confirmation procedures in certain 

situations. The Amendments add a requirement that the auditor should perform 

confirmation procedures for cash held by third parties, carry forward the existing 

requirement that the auditor normally should perform confirmation procedures for 

accounts receivable, and include a new provision that the auditor may otherwise 

obtain audit evidence by directly accessing information maintained by a 

knowledgeable external source for cash and accounts receivable.7 In addition, the 

Amendments carry forward the existing requirement that the auditor consider 

confirming the terms of certain other transactions.8

• Addressing situations in which it would not be feasible for the auditor to obtain 

information directly from a knowledgeable external source. The Amendments provide 

that if it would not be feasible for the auditor to obtain audit evidence directly from a 

knowledgeable external source for accounts receivable, the auditor should perform 

other substantive procedures, including tests of details, that involve obtaining audit 

evidence from external sources indirectly.9

• Mandatory communications with the audit committee regarding certain audit 

responses to significant risks. Under the Amendments, for significant risks associated 

6 See AS 2310.03, as amended.

7 See AS 2310.24 through .27, as amended.

8 See AS 2310.30, as amended.

9 See AS 2310.25, as amended.
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with cash or accounts receivable, the auditor is required to communicate with the 

audit committee when the auditor either did not perform confirmation procedures or 

otherwise obtained audit evidence by directly accessing information maintained by a 

knowledgeable external source.10

• Reflecting the relatively insignificant amount of audit evidence obtained when using 

negative confirmation requests. Under the Amendments, the use of negative 

confirmation requests may provide sufficient appropriate audit evidence only when 

combined with other substantive procedures. The Amendments include examples of 

situations in which the use of negative confirmation requests in combination with 

other substantive procedures may provide sufficient appropriate audit evidence.11

• Emphasizing the auditor’s responsibility to maintain control over the confirmation 

process. The Amendments state that the auditor should select the items to be 

confirmed, send confirmation requests, and receive confirmation responses.12

• Providing more specific direction for circumstances where the auditor is unable to 

obtain relevant and reliable audit evidence through confirmations. The Amendments 

identify situations where other procedures should be performed by the auditor as an 

alternative to confirmations. The Amendments also include examples of such 

alternative procedures that may provide relevant and reliable audit evidence.13

10 See AS 2310.28, as amended.

11 See AS 2310.12 and .13, as amended.

12 See AS 2310.14 through .17, as amended.

13 See AS 2310.11, .19, .23, and Appendix C, as amended.
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B. Applicability and Effective Date

The Amendments will be effective for all audits of financial statements for fiscal years 

ending on or after June 15, 2025. The PCAOB has proposed application of the Amendments to 

include audits of emerging growth companies (“EGCs”),14 as discussed in Section IV below. 

III. Comment Letters

The comment period on the Amendments ended on November 7, 2023. We received 

three (3) comment letters.15 The commenters generally supported the Amendments and 

encouraged us to support the PCAOB’s plans to monitor implementation, conduct postimplementation review, and monitor advancements in technology that may affect application of 

the Amendments. We acknowledge the importance of monitoring the implementation of the 

Amendments and the Commission staff works closely with the PCAOB as part of our general 

oversight mandate.16 As part of that oversight, Commission staff will keep itself apprised of the 

PCAOB’s activities for monitoring the implementation of the Amendments and update the 

Commission, as necessary. Additionally, one commenter made suggestions for expanded 

explanations and examples. The adopting release addresses the points raised by the commenter. 

SOX requires us to determine whether the Amendments are consistent with the 

requirements of SOX and the securities laws or are necessary or appropriate in the public interest 

or for the protection of investors.17 In making this determination, we have considered the 

14 The term “emerging growth company” is defined in Section 3(a)(80) of the Exchange Act (15 U.S.C. 

78c(a)(80)). See also Inflation Adjustments and Other Technical Amendments Under Titles I and III of the 

JOBS Act, Release No. 33-10332 (Mar. 31, 2017) [82 FR 17545 (Apr. 12, 2017)], available at

https://www.sec.gov/rules/final/2017/33-10332.pdf. 

15 See Supra note 4. 

16 See Section 107 of SOX. 

17 See Section 107(b)(3) of SOX. SOX also specifies that the provisions of Section 19(b) of the Exchange Act 

shall govern the proposed rules of the Board. See Section 107(b)(4) of SOX. Section 19 of the Exchange 
6

comments we received, as well as the feedback received and modifications made by the PCAOB 

throughout its rulemaking process.

IV. Effect on Emerging Growth Companies

In the notice of filing of the Amendments, the Board recommended that the Commission 

determine that the Amendments apply to audits of EGCs.

18 Section 103(a)(3)(C) of SOX, as 

amended by Section 104 of the Jumpstart Our Business Startups Act of 2012, requires that any 

rules of the Board requiring mandatory audit firm rotation or a supplement to the auditor’s report 

in which the auditor would be required to provide additional information about the audit and the 

financial statements of the issuer (auditor discussion and analysis) shall not apply to an audit of 

an EGC. The provisions of the Amendments do not fall into these categories.

19 

Section 103(a)(3)(C) further provides that “[a]ny additional rules” adopted by the 

PCAOB after April 5, 2012, do not apply to audits of EGCs “unless the Commission determines 

that the application of such additional requirements is necessary or appropriate in the public 

interest, after considering the protection of investors and whether the action will promote 

efficiency, competition, and capital formation.” The Amendments fall within this category. 

Having considered those statutory factors, we find that applying the Amendments to the audits of 

EGCs is necessary or appropriate in the public interest.

Act covers the registration, responsibilities, and oversight of self-regulatory organizations. Under the 

procedures prescribed by SOX and Section 19(b)(2) of the Exchange Act, the Commission must either

approve or disapprove, or institute proceedings to determine whether the proposed rules of the Board 

should be disapproved; and these procedures do not expressly permit the Commission to amend or 

supplement the proposed rules of the Board.

18 See the Notice of Filing of Proposed Rules, supra note 3.

19 While the precise scope of this category of rules under Section 103(a)(3)(C) is not entirely clear, we do not 

interpret this statutory language as precluding the application of Board rules requiring inclusion of 

additional factual information about referred-to auditors and the scope of their work in connection with the 

audits of EGCs. In our view, this approach reflects an appropriate interpretation of the statutory language 

and is consistent with our understanding of the Congressional purpose underlying this provision.
7

With respect to the Commission’s determination of whether the Amendments will apply 

to audits of EGCs, the PCAOB provided information, including data and analysis of EGCs 

identified by the Board’s staff, from public sources that sets forth its views as to why it believes 

the Amendments should apply to audits of EGCs. In addition, the Board sought public input on 

the application of the Amendments to the audits of EGCs. Commenters generally supported the 

application of the Amendments to the audits of EGCs. The Board noted that while the associated 

costs may be higher for EGC audits than for non-EGC audits, due to the scalability of the riskbased requirements, the costs of performing the procedures are unlikely to be disproportionate to 

the benefits of the procedures. Overall, the Amendments are expected to enhance audit quality 

and contribute to an increase in the credibility of financial reporting by EGCs. 

We agree with the Board’s analysis and further emphasize the price efficiency benefits 

discussed by the PCAOB noting that improvements in the quality of the audit may be more 

pronounced on the audits of EGCs, thereby potentially creating a larger increase to the price 

efficiency of EGCs by providing investors with more accurate information. Price efficiency 

helps investors make more informed investment decisions—facilitating issuers’, including 

EGCs’, access to capital—thus enhancing capital formation. Additionally, while the 

Amendments could impact competition in the EGC market if the indirect costs to audited 

companies disproportionately impact EGCs relative to their competitors, as the costs associated 

with the Amendments are expected to be relatively modest, any impact on competition is likely 

to be relatively small. As such, after considering the protection of investors and whether the 

action will promote efficiency, competition, and capital formation, we believe there is a 

sufficient basis to determine that applying the Amendments to the audits of EGCs is necessary or 

appropriate in the public interest. 
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V. Conclusion

The Commission has reviewed and considered the Amendments, the information 

submitted therewith by the PCAOB, and the comment letters received. In connection with the 

PCAOB’s filing and the Commission’s review,

A. The Commission finds that the Amendments are consistent with the

requirements of SOX and the securities laws and are necessary or appropriate in the public 

interest or for the protection of investors; and

B. Separately, the Commission finds that the application of the Amendments to the 

audits of EGCs is necessary or appropriate in the public interest, after considering the protection 

of investors and whether the action will promote efficiency, competition, and capital formation.

IT IS THEREFORE ORDERED, pursuant to Section 107 of SOX and Section 19(b)(2) of 

the Exchange Act, that the Amendments (File No. PCAOB-2023-02) be and hereby are 

approved.

By the Commission.

J. Matthew DeLesDernier,

Deputy Secretary.