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"
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 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.
Topics: audit quality control systems, Auditing Accounting Estimates (AS 2501), Auditor's Reporting Model, Auditor's Use of the Work of Specialists, Data, PCAOB, PCAOB Office of the Chief Auditor, PCAOB Research Agenda, PCAOB Standard-setting Agenda, Public Company Accounting Oversight Board "PCAOB", Securities and Exchange Commission "SEC", Technology
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.