The SEC approved the PCAOB’s
Auditing Standard no. 5, An Audit of Internal
Control Over Financial Reporting That Is
Integrated With An Audit of Financial
Statements, clearing the way for the measure to
replace Auditing Standard no. 2.
The new standard is designed to increase the
likelihood that material weaknesses in internal
control are found before they result in material
misstatement of a company’s financial statements, and,
at the same time, eliminate procedures that are
unnecessary, according to the PCAOB.
Registered audit firms are required to use the new
standard for all audits of internal control no later
than for fiscal years ending on or after Nov. 15,
The full text of the rule is available
A July report issued by the
Robert Half International Financial Leadership
Council identifies several major issues confronting
the future of accounting and related professions
Charting the Future of the Accounting, Finance and
Audit Professions is the result of a two-day
summit of council members representing a diverse group
of leaders from these fields, including AICPA
President and CEO Barry Melancon.
identifies the following key findings and solutions:
Recruitment and Retention. As
competition for skilled professionals increases, new
approaches for locating and retaining these
individuals must be sought out and implemented. New
recruitment strategies include a concerted branding
effort on behalf of the accounting, finance and
auditing professions. Spotlighting individuals who
have achieved a successful balance between career and
family may help address perception-related recruiting
challenges. An increased focus on enhancing the early
experiences of Generation Y professionals includes
career guidance, projects involving continual learning
and better balance between routine and challenging
Preparing the Workforce for the Future.
Practitioners at all levels need a wider
range of skills to be successful in the future. These
include effective communication skills and involve
staying on top of the latest technologies that enhance
communication. Also, expanded analytical
skills—answering the “why” behind the numbers—are
necessary for professionals in more strategic roles.
Adapting to Today’s Global Business Environment.
Increasing cultural literacy,
professional judgment and familiarity with new
financial reporting methods will contribute to a
professional’s improved ability to operate within a
global business environment. The urgent need for
skilled professionals may include seeking talent
For more information about the
council or to get a free copy of the report, go to www.financialleadershipcouncil.com
or call 800-803-8367.
The PCAOB proposed a new ethics
and independence rule,
Communication With Audit Committees Concerning
Independence , which would replace the board’s
interim independence requirement and two related
interpretations. Proposed Rule 3526 would require a
registered public accounting firm to inform an
issuer’s audit committee about any relationships
between the firm and the issuer that could reasonably
be thought to affect the firm’s independence. The
communications would be required both before the firm
accepts a new engagement pursuant to the standards of
the PCAOB and annually for continuing engagements.
The board also proposed an amendment to Rule
3523, Tax Services for Persons in Financial
Reporting Oversight Roles , and an adjustment
to the implementation schedule for the rule as it
applies to tax services provided during the audit
period. The amendment would exclude from the scope of
the rule the portion of the audit period that precedes
the beginning of the professional engagement period.
The proposed rule and amendment are available at
. Comments on both proposals are due by Sept. 7.
FASB issued proposed Statement
133 Implementation Issue no. E23,
Issues Involving the Application of the Shortcut
Method Under Paragraph 68. The proposal
provides guidance on certain practices involved in the
application of the shortcut method—one technique for
determining hedge accounting. The proposal is designed
to promote consistency in the use of the shortcut
method and to provide investors and others with better
information about how the shortcut method affects a
company’s financial statements.
the proposal are due by Sept. 21. The proposal is
available at www.fasb.org/derivatives/07-23-07_E23.pdf.
The Center for Audit Quality has
signed on as a supporter of the Aspen
Principles, a set of guidelines for business and
investment practices and the long-term competitiveness
of U.S. business. Compensation provisions in the Aspen
Principles include a call for companies to tie senior
executives’ interests to their companies’ long-term
growth by requiring them to hold on to company stock
for periods beyond their tenure with a company.
Another provision supports the use of “clawbacks” to
recoup certain performance-based compensation for
senior executives in the wake of corporate financial
restatements. The principles also urge companies to
stop providing quarterly earnings guidance to
“The Center for Audit Quality, with
the public company auditing profession, is committed
to protecting investors and ensuring the continued
vibrancy of U.S. capital markets,” Cynthia Fornelli,
CAQ’s executive director, said in a news release. “The
Aspen Principles play a fundamental role in achieving
The set of principles resulted
from an initiative involving The Aspen Institute
Business and Society Program, the Council of
Institutional Investors and the Business Roundtable.
Audit firms could face stronger
international independence requirements,
according to a proposal by the International
Ethics Standards Board for Accountants (IESBA). The
IESBA, which is an independent standard-setting board
within the International Federation of Accountants
(IFAC), released an exposure draft that would make
changes to Proposed Revised Section 290,
Independence—Audit and Review Engagements ,
and Proposed Section 291, Independence—Other
Assurance Engagements, of the IFAC Code of
Ethics for Professional Accountants.
proposed changes focus on the provision of internal
audit services to an audit client, independence
implications based on the relative size of fees
received from one assurance audit client that is an
entity of significant public interest and contingent
fees for services provided to assurance clients.
Comments are due by Oct. 15. To view the ED, visit www.ifac.org/EDs.
The SEC took another step toward
XBRL technology with final rule amendments
that enable mutual funds to submit risk and return
summary information from their prospectuses using
interactive data under the SEC’s voluntary program.
The submission of tagged risk and return summary
information will be supplemental and will not replace
the required versions of the information. The rule
amendments permit mutual funds to submit tagged risk
and return summary information using a taxonomy
developed by the Investment Company Institute. The
taxonomy is available on XBRL International’s Web site
. To view the SEC release, go to www.sec.gov/rules/final/2007/33-8823.pdf.
The National Credit Union
Administration (NCUA) issued a proposed rule that
would prohibit an official, employee, or
their immediate family members, from receiving,
directly or indirectly, any commission, fee or other
compensation in connection with an eligible obligation
transaction. An eligible obligation includes a loan or
group of loans made to a member by another lender.
The purpose of the rule is to ensure federal
credit unions make decisions about the purchase and
sale of eligible obligations based on business
considerations and not personal benefit to insiders.
Subject to certain exceptions, the rule would allow a
federal credit union to purchase its members’ eligible
obligations from any source as long as the loans are
ones the federal credit union is authorized to grant,
up to an amount equal to 5% of its unimpaired capital
The new rule, which became
effective Aug. 27, is available at www.ncua.gov/RegulationsOpinionsLaws/proposed_regs/P-701-23.pdf
The PCAOB entered into a
statement of protocol with the Australian Securities
and Investments Commission to enhance
cooperation in the oversight of auditors and public
accounting firms that practice in their respective
jurisdictions. Nearly 40 of the 780 audit firms
registered with the PCAOB are in Australia.
“Expanding the PCAOB’s international program is a
top priority for the organization, and we are currently
working with other oversight bodies in several non-U.S.
jurisdictions to establish cooperative arrangements,”
Rhonda Schnare, the PCAOB’s director of international
affairs, said in a news release.