[Global Financial Insights] PCAOB Highlights Auditor Turnover & Financial Restatements

Editorial Team – [2025] 179 taxmann.com 382 (Article)

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update:

1. PCAOB publishes data points on financial restatements and auditor turnover

Public Company Accounting Oversight Board (PCAOB) publishes data points every year to assist regulators and investors in assessing trends in financial reporting reliability. These data points also provide concise, data driven insights relevant to audit. The data points are drawn from PCAOB datasets and other available sources.

On 15th October 2025, PCAOB has published a new edition of data points on financial restatements and auditor turnover. This edition discusses broadly about the “Big R Financial Restatements” and “Auditor Turnover”.

“Big R Financial Restatements” refers to a material restatement which is a correction of an error so significant that previously issued financial statements can no longer be relied upon. This edition of PCAOB data point states that, from 2005 to 2024, “Big R Financial Restatements” occurred at a rate of around 3% per year.

“Auditor Turnover” refers to changes in the external audit firm engaged by a public company. The PCAOB monitors this as a data point linked to audit quality. “Big R Restatements” is one of the major factor for auditor turnover. As per this edition of PCAOB states that, 30% of these restatements followed an auditor change in the previous year. The PCAOB further observed that the average annual auditor-change rate across the broader population, which includes companies without Big R restatements, was 11%.

Source – Public Company Accounting Oversight Board

2. FRC invitation for guidance on pension scheme actuaries

In the earlier global financial update we have discussed regarding the pension scheme amendments brought forward by the United Kingdom (UK) government. The Financial Reporting Council (FRC) has then decided to develop technical guidance on pension schemes.

FRC in this regard has invited stakeholders to attend a roundtable to support the development of technical guide. Thus, to ensure the guidance is practical, proportionate, and consistent across the industry, the FRC is inviting professionals from all segments of the pensions and actuarial community to participate in an online roundtable discussion. This discussion will further explore on how practitioners plan to approach the confirmation of historic amendments and identify potential challenges in delivering this technical actuarial work.

FRC has scheduled this online roundtable on 13th November, 2025.

Source – Financial Reporting Council

Click Here To Read The Full Article