SEC Advisor Speaks on Materiality and Auditor’s Report
At a recent speech for management accountants at a conference in Tulsa, OK, Stephen Deane discussed mini-case studies on policymaking associated with materiality and the independent auditor’s report. Deane, an investment engagement advisor in the Securities and Exchange Commission’s (“SEC”) Office of the Investor Advocate, said that the mini-case studies offer insight into the policymaking process and the problems that policymakers face. The mini-case studies also distinguish between outside investors and managers inside the company. During his speech, Deane provided attendees a technical review of the Financial Accounting Standards Board’s attempts to establish materiality guidance and the Public Company Accounting. Read More.
Topics: Auditor's Report, FASB, Financial Accounting Standards Board "FASB", materiality, PCAOB, Public Company Accounting Oversight Board "PCAOB", SEC's Office of the Investor Advocate, Securities and Exchange Commission "SEC"
SEC Seeks Comments on PCAOB’s Auditor’s Report Standard
The Securities and Exchange Commission (“SEC”) wants feedback on the Public Company Accounting Oversight Board’s (“PCAOB”) auditing standard, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion. Recently, the SEC issued the related document for public comment, Notice of Filing of Proposed Rules on The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion, and Departures from Unqualified Opinions and Other Reporting Circumstances, and Related Amendments to Auditing Standards. Subject to SEC approval, the PCAOB standard is intended to improve the effectiveness of the auditor’s report by. Read More.
PCAOB Approves Expanded Auditor’s Report
In a unanimous decision, the Public Company Accounting Oversight Board (“PCAOB”) has approved a rule to expand auditor reports in a Securities and Exchange Commission (“SEC”) filing. Announced on June 1, the new format will make filed auditor reports more valuable to investors. The rule requires a public company’s external auditor to disclose any critical audit matters that arise while auditing their clients, and provide details on clients’ financial reporting procedures. Such requirements are listed under Release No. 2017-001, The Auditor’s Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB. Read More.
European Study Examines Mandatory Audit Rotations
A study from Europe has determined that requiring public companies to change audit firms every few years may be a bad idea. The study, which covered the Public Company Accounting Oversight Board’s Concept Release No. 2011-006, Auditor Independence and Audit Firm Rotation, revealed dissimilarities between the trust clients maintain in auditors and professional skepticism auditors exhibit toward clients. Those in support of mandatory audit rotations say a lengthy relationship between auditors and clients can negatively impact an auditor’s skepticism and objectivity, leading to a reduced audit quality. They also believe term limits would offset an auditor’s inclination to have a. Read More.
PCAOB Revises Form AP Staff Guidance
The Public Company Accounting Oversight Board (“PCAOB”) has provided staff guidance updates for Form AP, Auditor Reporting of Certain Audit Participants. Issued as Staff Guidance on Form AP, Auditor Reporting of Certain Audit Participants and Related Voluntary Audit Report Disclosure Under AS 3101, Reports on Audited Financial Statements , the update replaces the January edition and offers firms guidance on professional staff in secondment arrangements. Form AP requires the disclosure of participating firms and engagement partners in public company audits. Firms must file Form AP for public company audit reports released on or after January 31, 2017 (for engagement partners), and June 30, 2017 (for other participating audit firms).
Updated PCAOB Agenda Delays Standard-Setting Projects
The Public Company Accounting Oversight Board’s (“PCAOB”) efforts to finalize and propose new standards are on hold by one quarter, according to the audit regulator’s updated standard-setting agenda. Projects that will be delayed include expansion of the auditor’s report, which the PCAOB hopes to adopt a final rule in the first quarter of 2017. PCAOB Chairman James Doty originally wanted the project completed last year. Two other projects delayed are proposals regarding audits of accounting estimates and the use of specialists. Originally expected to be issued during the first quarter, both proposals are now set for a second quarter release.