Auditors would have to tell investors more about the tough decisions they had to make in evaluating a company's finances under a new proposal from the government's audit-industry regulator.

The proposal, issued Tuesday by the Public Company Accounting Oversight Board, also would require auditors to evaluate whether the assertions a company makes in its annual report are accurate—a move which would take the auditors beyond their traditional rule of verifying a company's numbers.

Both changes are part of a plan by the PCAOB to overhaul and expand the audit report— the letter in every annual report in which an auditor avers that the company's financial statements are "fairly presented." The moves are aimed at making the audit report more useful for investors, as opposed to the current boilerplate letter that critics say tells investors little of substance about a company's true condition.

The PCAOB's proposal also would add some disclosures to the audit report, notably information about how long the auditor has worked for the company. Many companies have used the same audit firms for decades, and some critics think that can lead to coziness that can jeopardize an auditor's professional skepticism and ability to conduct a tough audit.

"I think we've got a better mousetrap," said PCAOB Chairman James Doty. He called the proposal "a watershed moment for auditing."