Standing Advisory Group Wants PCAOB to Pause on Standard-Setting for Technology Use
With the Public Company Accounting Oversight Board (“PCAOB”) studying auditors’ increased technology and data use, members of its Standing Advisory Group (“SAG”) have asked the board to proceed with caution when drafting new guidance. Referencing member feedback during a meeting last month, PCAOB Deputy Chief Auditor Patrick McNamee said that the SAG wants the board to focus on guidance instead of updating auditing standards. The ever-changing use of technology in audit work is being contributed to the SAG’s stance. SAG members advised the PCAOB to use its inspection findings to assess how accounting firms use technology and data in audits,. Read More.
PCAOB Updates Standard-Setting and Research Agenda
The Public Company Accounting Oversight Board’s (“PCAOB”) latest standard-setting update and research agenda have been published by its Office of the Chief Auditor (“OCA”). Updated as of March 31, the agenda reflects the PCAOB and its staff’s current plans, as well as the OCA’s standard-setting agenda and scheduled milestones. Some of the planned milestones and projects include: Finalizing the auditor’s reporting model standard for a second-quarter release; Determining the next steps in the project on audit oversight involving other auditors; and The auditor’s role in handling other information and company performance methods, such as non-GAAP measures. Visit to PCAOB website. Read More.
New PCAOB White Paper Discusses Emerging Growth Companies
A new white paper by the Public Company Accounting Oversight Board (“PCAOB”) features significant observations about emerging growth companies. Published as White Paper on Characteristics of Emerging Growth Companies , the report includes information from recent Securities and Exchange Commission (“SEC”) filings and statistics from third-party vendors as of November 15, 2016. Some of the key observations discuss the emerging growth companies with common equity securities on U.S. exchanges; the percentage of emerging growth companies not listed on an exchange and reported zero revenues and those that disclosed they were shell companies; and the filers that delivered management reports regarding internal control over financial reporting, and those filers. 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).
Executive Order Could Affect the SEC
President Trump recently signed an executive order that could have an impact on Securities and Exchange Commission (“SEC”) rulemaking. The Executive Order, Presidential Executive Order on Reducing Regulation and Controlling Regulatory Costs , calls for the elimination of two existing regulations for every new regulation introduced. In addition, the order sets the fiscal year 2017 regulatory budget at $0. The Public Company Accounting Oversight Board’s rulemaking efforts could also be affected by the president’s order. To read the executive order, please visit WhiteHouse.gov.