A little-known fact: The requirements for public companies to have their financial statements audited by an independent certified public accountant have been a mandate for almost a century.   
Companies preparing to go public – whether through a traditional IPO or a de-SPAC transaction – must have their financial statements audited under the standards set forth by the Public Company Accounting Oversight Board (PCAOB). These audits are required to be part of registration statements and annual reports filed with the Securities Exchange Commission (SEC).   

Companies that want to access capital markets should start planning early, even if they have been subject to an AICPA audit in the recent past. PCAOB standards require additional effort both from management and the auditors to address unique requirements in the PCAOB standards.  

Companies preparing for first-time audits under PCAOB standards need to consider and plan for the following: 

• Historical financial statements (up to two or three years depending on filing status) 
• Enhanced disclosures, including additional disclosures required for SEC Filers (e.g. segment reporting) 
• Robust documentation of accounting positions 
• Unwinding of accounting policy elections to apply certain practical expedients only available to private companies, such as the Private Company Council (PCC) alternative to amortize goodwill 
• Fair value measurements 
• Legal interpretations and opinions (e.g. ASC 450 contingencies) 
• Formal documentation and validating design and effectiveness of Internal Controls over Financial Reporting (ICFR) 

While each situation is different, the preparation for the audit by management and the planning and execution by the auditors could take anywhere from a couple of months to the better part of a year, depending on the state of the company’s books and records, audit history, and the complexity of the industry and go-public transaction(s).

Companies also need to allot enough time to get through the auditor’s client acceptance process, as the auditors may be required to evaluate additional independence considerations. 

One of the questions asked most often when a company is seeking to go public is around PCAOB audit readiness and the ability to get through the audit in a timely manner. Many companies may not have the in-house experience, given that they were operating as private companies in the past. While internal teams lead the charge, third-party specialists –  such as accounting and consulting firms with PCAOB audit experience, valuation experts, internal control specialists, actuaries, legal consultants, and IT advisors provide targeted support to assist with the audit process. Consultants who have worked closely with management to navigate the PCAOB audit process can provide critical assistance, including: 

• Identifying private company elections not available to an SEC Filer and incremental public company reporting requirements 
• Documenting complex and non-routine transactions 
• Updating or preparing additional technical accounting memos 
• Preparing financial statements, footnotes, and disclosures needed under generally accepted accounting principles and SEC reporting requirements 
• Preparing pro-forma financial statements where needed 
• Project managing the PCAOB audit process 

Going public is not just a financial milestone – it’s a transformation in governance, transparency, and accountability. Companies that invest early in audit readiness – especially with the help of experienced advisors – are better positioned to navigate the complexities of public market entry and sustain long-term success. It is recommended that companies start early, plan for potential roadblocks, and engage with various stakeholders to avoid surprises, as setbacks could delay the going-public process.