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.
AICPA Ethics Committee Agrees on Conflicts of Interest Revision
At its two-day meeting earlier this month, the American Institute of Certified Public Accountants’ (“AICPA”) Professional Ethics Executive Committee finalized a standard resolving conflicts of interest. Expected to go into effect later this year, the standard is a modification of Interpretation 102-2, Conflicts of Interest for Members in Public Practice, under ET Section 102, “Integrity and Objectivity-Conflicts of Interest”, and will pertain to accountants in public practice. Additionally, the AICPA plans to release Interpretation 102-7, Conflicts of Interest for Members in Business, a standard explaining and offering examples of conflicts of interest. Interpretation 102-7 will apply to accountants working for. Read More.
Initiative on Rethinking Financial Disclosure Announced
In response to the U.S. Securities and Exchange Commission (“SEC”) Chair Mary Jo White’s plea for simplifying Form 10-K disclosure requirements, the Institute for Corporate Responsibility (“ICR”) at the George Washington University School of Business and the Center for Audit Quality (“CAQ”) have created the Initiative on Rethinking Financial Disclosure (“the Initiative”). With teams of graduate students from George Washington’s School of Business, the project will feature research of issues related to effective corporate disclosure. Each team will examine Form 10-K reports from Fortune 500 companies, and recommend how to decrease insignificant or unneeded reporting requirements without losing the information’s. Read More.