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PCAOB Standard-Setting and Research Agendas Updated

The Public Company Accounting Oversight Board’s (“PCAOB”) Office of the Chief Auditor (“OCA”) has updated its standard-setting agenda. Revised as of June 30, the periodic update reflects the PCAOB’s standard-setting and research agendas, and includes the OCA’s standard-setting agenda, scheduled milestones, and recent developments including the following: Auditor’s Reporting Model (adopted in June by PCAOB and awaiting the Securities and Exchange Commission’s approval) Auditing Accounting Estimates, Including Fair Value Measurements (exposure draft comment period ends Wednesday, August 30) The Auditor’s Use of the Work of Specialists (exposure draft comment period ends Wednesday, August 30) Supervision of Audits Involving Other Auditors. Read More.

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PCAOB to Ask for Additional Comments on Lead Auditors Proposal

Before approving a rule to improve the lead auditor’s oversight of other accounting firms’ audit work, the Public Company Accounting Oversight Board (“PCAOB”) plans to ask for another round of comments. According to its recently updated standard-setting agenda released on July 6, the PCAOB needs to consider the issuance of a “supplemental request for comment” later this year. The board issued Release No. 2016-002, Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard—Dividing Responsibility for the Audit With Another Accounting Firm, to help lead auditors with the supervision of the work other firms perform. Read More.

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Standing Advisory Group Nominees Being Accepted

Nominations are being accepted for the 2018-2020 term of the Public Company Accounting Oversight Board’s (“PCAOB”) Standing Advisory Group (“SAG”). Announced in its June 13 press release , the PCAOB seeks candidates with accounting, auditing, corporate finance, corporate governance, or investing experience. Nominees familiar with auditing or financial reporting for broker-dealers and small public businesses are also requested. Self-nominations are also permitted. SAG nominee submissions are due by Saturday, August 12. Selected individuals will be announced in December, and will begin serving three-year terms in January 2018.

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PCAOB Wants to Improve Rules for Work of Specialists

Seeking to reinforce the applicable requirements for auditors that use the work of specialists in an audit, the Public Company Accounting Oversight Board (“PCAOB”) has issued the proposal, Proposed Amendments to Auditing Standards for Auditor’s Use of the Work of Specialists. The proposal aims to advance investor protection by improving the requirements for reviewing the work of company specialists, and applying a risk-based method to assessing the work of a specialist hired by the auditor. Specialists are often hired or appointed by companies to offer information used in preparing financial statements, and their work is frequently used as audit evidence.. Read More.

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PCAOB Proposal to Address Auditing Accounting Estimates

A new proposal by the Public Company Accounting Oversight Board (“PCAOB”) seeks to strengthen the applicable requirements for auditing accounting estimates. Issued as Proposed Auditing Standard for Auditing Accounting Estimates, Including Fair Value Measurements, the proposal advises auditors to use professional skepticism and give added attention to possible management bias while auditing accounting estimates. Auditors have had issues auditing some accounting estimates, causing PCAOB inspectors to flag deficiencies at both small and large audit firms. Such deficiencies have raised concerns on auditors’ application of professional skepticism and their consideration of possible management bias. In response, the PCAOB proposes a new. Read More.

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Financial Restatements Lowest in 15 Years

Audit Analytics is reporting the lowest total number of financial restatements among publicly traded companies since 2002. In its May report, Audit Analytics said restatements dropped 6.83 percent last year (671 companies). Separately, the percentage of financial restatements in 2016 was the lowest since 2007. Regulatory oversight is receiving partial credit for the low numbers. Audit Analytics Director of Research Don Whalen was not surprised by the downward trend, saying that improved internal controls over financial reporting have helped companies. Whalen noted the improved internal controls are due largely to the Public Company Accounting Oversight Board’s efforts and the Committee. Read More.

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