News Highlights for June 2010


The PCAOB proposed for comment an auditing standard, Communications with Audit Committees, and a series of related amendments to its interim standards.

 

The proposal includes a requirement for the auditor to establish a mutual understanding of the terms of the audit engagement with the audit committee and to document that understanding in an engagement letter.

 

It also includes requirements relating to:

 

  • Communication of an overview of the audit strategy, including a discussion
  • of significant risks, the use of the internal audit function; and the roles, responsibilities
  • and location of firms participating in the audit.
  • Communication regarding critical accounting policies, practices and estimates.
  • Communication regarding the auditor’s evaluation of a company’s ability to
  • continue as a going concern.
  • Evaluation by the auditor of the adequacy of the two-way communications.

 

The proposed auditing standard would supersede PCAOB interim standard AU section 380, Communication With Audit Committees, and AU section 310, Appointment of the Independent Auditor, and amend a number of other interim standards. If adopted by the PCAOB, the standard would be submitted to the SEC for approval.

 

The comment period ended May 28.

 

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