SEC Approves Updates to Auditor’s Report
The Securities and Exchange Commission (“SEC”) has unanimously approved an audit reporting standard by the Public Company Accounting Oversight Board requiring significant improvements to certain public company reports. Such improvements aim to make the auditor’s report more informative and address the communication of critical audit matters (“CAMs”) and disclosures concerning auditor tenure. The new auditor’s report is expected to offer investors meaningful insight regarding audits, such as important estimates and judgments, substantial unusual transactions, and other potential risk areas for an organization. Speaking on the objective of the auditing standard, SEC Chairman Jay Clayton said investors will benefit from a. Read More.
PCAOB Issues Guidance for Revenue Recognition Standard
After reviewing implementation of Accounting Standards Update (“ASU”) No. 2014-09, Revenue From Contracts With Customers (Topic 606), the Public Company Accounting Oversight Board (“PCAOB”) is responding with a new Staff Audit Practice Alert (“APA”) to provide auditors with interpretive guidance. Released on October 5, APA No. 15, Matters Related to Auditing Revenue From Contracts With Customers, features 20 pages of staff guidance highlighting the PCAOB’s requirements and related considerations for audits. Such considerations include confirmation of management’s transition disclosures in financial statement notes and transition adjustments. The PCAOB said that as implementation of the Financial Accounting Standards Board’s revenue standard. Read More.
Topics: Accounting Standards Update "ASU", FASB, Financial Accounting Standards Board "FASB", PCAOB, Public Company Accounting Oversight Board "PCAOB", Revenue from Contracts with Customers (Topic 606), Revenue Recognition, Staff Audit Practice Alert
PCAOB Updates Project Agendas
The Public Company Accounting Oversight Board’s (“PCAOB”) Office of the Chief Auditor recently published an update to its standard-setting and research project agenda. The revised agenda includes the Office’s present standard-setting agenda, planned milestones, and important recent developments. The PCAOB’s standard-setting agenda includes the following projects: Auditor’s Reporting Model: Adopted in June and approved by the Securities and Exchange Commission on October 23rd. Auditing Accounting Estimates, Including Fair Value Measurements: Reviewing comments on exposure draft of the proposed standard. The Auditor’s Use of the Work of Specialists: Reviewing comments on exposure draft of the proposed standard. Supervision of Audits Involving. Read More.
Topics: Auditing Accounting Estimates (AS 2501), Auditor's Reporting Model, Auditor's Use of the Work of Specialists, PCAOB, PCAOB Office of the Chief Auditor, PCAOB Standard-setting Agenda, Public Company Accounting Oversight Board "PCAOB", Quality Control
Investor Advisory Group Seeks Audit Standards for Non-GAAP Measures
Regulators searching for a reliable way to evaluate non-GAAP financial measures so that they aren’t misleading to investors should define their standards based on key performance indicators (“KPIs”) for specific industries. This guidance is the latest recommendation to come from a working group of the Investor Advisory Group (“IAG”), which is part of the Public Company Accounting Oversight Board (“PCAOB”). Many public companies feel that U.S. GAAP metrics don’t reflect how they manage their businesses as well as some non-GAAP metrics do. However, non-GAAP measures pose an issue for auditors. The IAG’s working group is trying to balance. Read More.
PCAOB Issues Staff Inspection Brief on Audit Risks
The latest Staff Inspection Brief by the Public Company Accounting Oversight Board (“PCAOB”) features information on the agency’s ongoing inspections of auditors of public companies and other issuers. Announced on August 30, the Staff Inspection Brief provides guidance on audit risks that PCAOB inspectors seek to address. The brief also encourages auditors to improve audit quality. In addition, the Staff Inspection Brief highlights the issues PCAOB inspectors consider during auditor inspections. Such issues include whether the auditor was cognizant of how the issuer created its estimates, dealt with forthcoming accounting changes, and used proper software tools to review data that met audit objectives.
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"