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1. ASB proposes moving content of AT Section 501 into GAAS  

The AICPA Auditing Standards Board (ASB) is proposing moving a section of its attestation standards into generally accepted auditing standards (GAAS).Engagements performed under existing AT Section 501, An Examination of an Entity’s Internal Control Over Financial Reporting That Is Integrated With an Audit of Its Financial Statements, as well as related attestation Interpretation No.

2. PCAOB alert calls for auditors to focus on revenue   WebExclusive

BY Ken Tysiac
The PCAOB on Tuesday urged auditors to focus on the board’s standards for auditing revenue.In Staff Audit Practice Alert No. 12, Matters Related to Auditing Revenue in an Audit of Financial Statements, the PCAOB discusses board requirements for auditing revenue that are relevant to significant audit deficiencies found frequently during inspections.The alert discusses:Testing whether revenue was recognized in the correct period.Evaluating whether the financial statements include the required disclosures regarding revenue.Responding to risks of material misstatement due to fraud associated with revenue.Testing and evaluating controls over revenue.Applying audit sampling procedures to test revenue.Performing substantive analytical procedures to

3. Learn from data to improve audits   CPEDirect

BY The AICPA Peer Review Team
To help audit firms develop more-focused remedies for their accounting and auditing practices, the AICPA Peer Review team has been collecting data since December 2012 on Matters for Further Consideration (MFCs). An MFC form is used by peer reviewers to electronically capture “matters” detected during a peer review that are the most granular level of information indicating accounting and auditing deficiencies.The AICPA Peer Review team is using the data to identify problem areas in order to provide firms with tools to increase audit quality.

4. Audit regulators see positive signs   CPEDirect

BY Ken Tysiac
Jay Hanson and Lewis Ferguson bring different perspectives to their duties as board members of the PCAOB. Hanson, a CPA, has personal experience auditing public companies. Ferguson, a lawyer who specialized in securities and corporate governance matters, brings legal expertise and a global perspective enhanced by his work as chairman of the International Forum of Independent Audit Regulators (IFIAR).During a recent conversation with the JofA at the PCAOB offices in Washington, Hanson and Ferguson shared their perspectives on a variety of issues facing the auditing profession.

5. Socially awkward   CPEDirect

BY Theresa F. Henry, CPA, Ph.D., David A. Rosenthal, Ph.D. and Rob R. Weitz, Ph.D.
In November 2013, SEC Chair Mary Jo White questioned whether investors could project a company’s future potential from “unique financial or operational metrics” that may not be an indicator of future profitability. These comments followed Twitter’s initial public offering (IPO), which raised $1.82 billion through the planned sale of 70 million shares at $26 per share.

6. A holistic approach to audit quality  

BY Ken Tysiac
In one of the first steps of the new Enhancing Audit Quality (EAQ) initiative, a major effort to improve auditing of private entities, the AICPA has released a discussion paper seeking stakeholder perspectives.Through the two-phased initiative, the AICPA is coordinating resources to improve performance in audits of private entities, defined as non-SEC registrants, including not-for-profits, employee benefit plans, and governmental entities.“EAQ is a holistic effort to consider auditing of private entities through multiple touch points, especially where quality issues have emerged,” AICPA President and CEO Barry Melancon, CPA, CGMA, said in a news release.

7. COSO transition getting a close look from auditors   WebExclusive

BY Ken Tysiac
The early stages of implementation are over for many companies using the updated internal control framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO).In 2013, the framework—which had been in use since 1992—was updated to reflect changes in the business environment. U.S. public companies have been working to implement the new framework to fulfill their internal control over financial reporting requirements under the Sarbanes-Oxley Act (SOX).COSO will consider the 1992 framework to be superseded following a transition period that ends Dec.

8. Clarified, revised SSARS approved for reviews, compilations, and engagements to prepare financial statements   WebExclusive

BY Ken Tysiac
The AICPA Accounting and Review Services Committee (ARSC) voted during its meeting this month to approve clarified and revised standards for reviews, compilations, and engagements to prepare financial statements.The clarified and revised standards for compilations and engagements to prepare financial statements create a bright line between accounting (preparation) services and reporting (compilation) services.

9. Five elements of effective judgment process for auditors   WebExclusive

BY Ken Tysiac
The public relies on auditors to make critical professional judgments in an objective, professionally skeptical manner.Participants in capital markets who are making investment decisions place trust and confidence in the judgments made by auditors during audits of public company financial statements.A new Professional Judgment Resource released Wednesday by the Center for Audit Quality (CAQ) describes judgment challenges auditors face—and the critical elements of an effective judgment process for auditors.

10. PCAOB requests comments on auditing accounting estimates and fair value measurements   WebExclusive

BY Ken Tysiac
The PCAOB is seeking input as it weighs possible standard-setting activities related to auditing accounting estimates and fair value measurements.In a staff consultation paper released Tuesday, the PCAOB Office of the Chief Auditor seeks comments on the potential need for changes to PCAOB standards—and a possible approach to a new auditing standard.“Accounting estimates and fair value measurements can be subjective and complex, yet they can be an important part of a company’s financial statements and critical to investors’ decision-making,” PCAOB Chairman James Doty said in a news release.
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