Your fund audit is coming up. Your accountant mentions PCAOB standards. Your lawyer talks about AICPA GAAS. Your investors want clean financials.
And you’re sitting there thinking: What’s the difference, and why should I care about PCAOB versus AICPA standards?
Most fund managers figure an audit is an audit. Not quite. Pick PCAOB when you don’t need it, and you’ll pay premium fees for unnecessary complexity. Stick with AICPA GAAS when PCAOB is required, and regulators won’t be amused.
The choice comes down to your fund structure, where your money comes from, and which regulatory boxes you need to check. Some funds need both standards applied simultaneously — yes, that’s as expensive as it sounds.
Don’t worry if your head’s spinning. We’re about to break it down into bite-sized pieces for you.
When PCAOB Standards Apply — and What They Add
PCAOB standards kick in when your fund touches public markets. Public companies, registered investment companies, BDCs, and SEC-registered broker-dealers must use PCAOB standards. No exceptions.
Here’s where the PCAOB versus AICPA discussion also gets expensive: PCAOB often requires dual opinions. Your auditor examines your financials and your internal controls separately. Larger public companies face Critical Audit Matters (CAMs) disclosures in their audit reports — extra transparency that costs extra time.
Broker-dealers also get special treatment with Compliance Reports or Exemption Reports under PCAOB Attestation Standards AT No. 1 and AT No. 2, all due on tight SEC deadlines.
PCAOB oversight hits harder too. Audit firms face annual inspections (if they audit 100+ issuers) or triennial reviews. Documentation assembly shrinks to 14 days, and retention stretches to seven years.
Translation: PCAOB audits cost more and take longer.
When AICPA GAAS Rules Your World
AICPA Generally Accepted Auditing Standards (GAAS) cover most private funds. The Auditing Standards Board sets these rules for non-issuers — that’s you if you’re not public.
GAAS audits focus on your financial statements. No dual opinion requirement like PCAOB versus AICPA standards demand. Your auditor can include Key Audit Matters (KAMs) under SAS 134-140, but they’re optional. Management ultimately decides whether to pay for the extra disclosure.
There is a twist, though: Many private funds use the SEC Custody Rule audit provision. Your fund needs GAAS standards, but your auditor must be PCAOB-registered and inspected.
Yes, you read that right — GAAS engagement, PCAOB-registered firm.
At the end of the day, GAAS oversight runs lighter. Firms face an AICPA Peer Review every three years. New Quality Management Standards (SQMS 1 & 2) kick in on December 15, 2025. And documentation gets finalized within 60 days and stored for five years.
The Takeaway: How to Decide What Your Fund Needs
So you’ve got the PCAOB versus AICPA breakdown. Now comes the real question: Which path does your fund take? The answer isn’t always obvious, especially when GAAS audits still require PCAOB-registered firms for certain compliance requirements.
Here’s your decision framework:
- Are You Public (or Going Public Soon)?: Listed RICs, BDCs, and companies filing for public status need PCAOB standards. Expect integrated audits covering internal controls if you become an accelerated filer.
- Do You Operate or Rely on a Broker-Dealer? Broker-dealer financials and compliance reports fall under PCAOB auditing standards. SEC-driven timelines and scope make this non-negotiable.
- Using the Custody Rule Audit as a Registered Investment Adviser? Private funds can stick with GAAS, but your auditor must be PCAOB-registered and inspected. Investors need those audited financials within 120 days (180 for fund-of-funds).
- What Do Your Institutional LPs Expect? Many institutional investors require PCAOB-registered firms in side letters or due diligence questionnaires, even when GAAS standards apply.
- Cost, Disclosure, and Timeline Trade-Offs: PCAOB audits mean more documentation, potential CAM disclosures, faster file-assembly rules, and SEC deadlines. Translation: higher costs and tighter timelines than GAAS for private funds.
Your Fund, Your Standards, Your Choice
Public vehicles and broker-dealers get no wiggle room. PCAOB audits are mandatory, complete with potential dual opinions and CAM reporting. Private funds can stick with GAAS audits, but your auditor still needs PCAOB registration if you use the Custody Rule. The winning formula: Pick the path that satisfies regulators and keeps your LPs happy without burning budget on unnecessary complexity. PCAOB versus AICPA standards each serve their purpose. Your fund’s structure and investor base determine which one fits.
Michael Coglianese CPA, P.C. specializes in audit, tax, and regulatory compliance for alternative investment managers. We help hedge, private equity, venture, real estate, and hybrid funds choose the right audit standard, meet SEC and investor requirements on schedule, and reduce operational risk through clean, defensible processes. Our team brings deep technical experience and transparent communication — fewer surprises, smoother closes, and audit approaches that match your fund’s growth trajectory.
Ready to determine which standard fits your fund and investor base? Contact us to discuss your structure, road map, and audit options.