Audit Reform Provisions Added to European Union
After being published this week in the Official Journal of the European Union (“the Journal”), the new Audit Directive and Regulation provisions are now law in the European Union. Approved by the European Parliament, the audit reform package was adopted by the Council of the European Union’s member states in April. Highlights of the new provisions include: Mandatory auditor rotation. Companies bound by statutory audits must change audit firms every 10 years, which can be extended up to another 10 years if they distribute tenders for audit services; or up to another 14 years in the event of a joint. Read More.
AICPA Updates the Trust Services Principles and Criteria Related to SOC 2 & 3 Audits
In February, the American Institute of Certified Public Accountants’ (“AICPA”) released an updated edition of its Trust Services Principles and Criteria (“TSP”) 2014. The TSP’s criteria is utilized by CPA firms in performing Service Organization Control (“SOC 2” or “SOC 3”) audit engagements that report on the system controls relevant to security, availability, processing integrity, confidentiality and/or privacy. The revised Trust Principles are effective for reporting periods ending or after December 15, 2014, but the AICPA is permitting early adoption. The revisions are intended to improve clarity, eliminate redundancy, and update criteria based upon changes in technology and business environments.. Read More.
Defense Contract Audit Agency Issues Guidance on Professional and Consulting Costs
The Defense Contract Audit Agency (“DCAA”) recently released a Memorandum for Regional Directors entitled, “ Audit Alert on Professional and Consultant Service Costs (FAR 31.205-33) and Purchased Labor ”. The intent of the memorandum is to ensure that auditors are testing the transaction based on the nature of the claimed cost, and not on the account nomenclature in which the contractor recorded the cost. Federal Acquisition Regulation (“FAR”) 31.205-33(a) defines professional and consulting services costs as services rendered by persons who are members of a particular profession, or possess a special skill, and who are not officers or employees of the contractor. Examples include those services acquired by contractors to enhance their legal,. Read More.
AICPA to Launch Enhancing Audit Quality Initiative
To improve the quality of audit reporting, the American Institute of Certified Public Accountants (“AICPA”) recently announced its Enhancing Audit Quality initiative. Discussed at the AICPA’s spring Council meeting in Scottsdale, Arizona, the efforts include monitoring the Auditing Standards Board’s execution of auditing and quality-control standards, creating new initiatives by the AICPA’s Future of Learning task force and changing the current peer review program for users. In the long run, the AICPA also hopes to develop a new monitoring program for enhancing public protection by early detecting engagement shortcomings, which will create more timely corrections. The program will also help. Read More.
Proposed Financial Statement Disclosure Changes Open for Public Comment
Featuring revisions to the International Standards on Auditing (“ISAs”), Proposed Changes to the International Standards on Auditing (ISAs): Addressing Disclosures in the Audit of Financial Statements has been issued for public comment by the International Auditing and Assurance Standards Board (“IAASB”). The updates explain what auditors should expect when reviewing financial statement disclosures. The proposed changes include: Clarifying the disclosures susceptible to audit such as financial statement disclosures; Guidance on disclosures in the early stages of audit; Guidance on identifying, evaluating and responding to risks of disclosures’ material misstatements; and Explaining an auditor’s expectations when reviewing misstatements and creating an. Read More.
AICPA’s SLGEP & Audit and Attest Standards Team Release New Auditing Interpretations
After hosting multiple discussions concerning the issues facing accounting and auditing implementation for government pension plans and participants, and their auditors due to the Governmental Accounting Standards Board’s (“GASB”) recent pension accounting standards, the American Institute of Certified Public Accountants (“AICPA”) State and Local Governments Expert Panel (“SLGEP”) and AICPA Audit and Attest Standards Team have come together to issue three auditing interpretations for guidance. The three audit interpretations are as follows: Interpretation No. 2, “Auditor of Participating Employer in a Governmental Cost-Sharing Multiple-Employer Pension Plan,” of AU-C section 500, Audit Evidence: This interpretation clarifies the audited financial statements of. Read More.