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AUDITING

PCAOB to consider new rules for auditing related-party transactions

 

By Ken Tysiac
June 4, 2014

The PCAOB will meet Tuesday to consider adopting rules that would create new audit procedures that an auditor should perform when examining a company’s transactions with related parties or significant unusual transactions.

Board members have sought comment twice on related-party proposals and are considering a standard and amendments to PCAOB rules that would be designed to revise auditor performance requirements in areas that could pose significant risks of material misstatement in company financial statements.

The PCAOB reproposed the standard on May 7, 2013, after reviewing comments made on the board’s original proposal from Feb. 28, 2012. The reproposal was designed to require auditors to give increased attention to the company’s identification of, accounting for, and disclosure of its relationships with related parties.

Amendments that also were reproposed in May 2013 would require the auditor to perform procedures to obtain an understanding of a company’s relationships and transactions with executive officers. The reproposal did not call for auditors to make a determination on whether compensation arrangements are reasonable.

The board’s meeting at 10:30 a.m. Tuesday in Washington will be available via webcast on the PCAOB’s website.

Ken Tysiac (ktysiac@aicpa.org) is a JofA senior editor.

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