News Highlights for October 2011

The PCAOB launched a new phase of its examination of potential limits on audit firm tenure with public companies. The board voted to issue a concept release on the topic. It plans to gather feedback by mid-December and hold a public forum on the issue in March 2012.


According to the release, the board is particularly focused on weighing the advantages and disadvantages of audit terms of 10 years or greater. The board is also mulling the scope of any potential requirement, such as whether the rules would apply only to audits of the largest public companies.


The 41-page document poses 21 questions about which the board is most interested in gathering opinions. The topics range from the appropriate length of the term, if term limits are imposed, to implementation considerations. The concept release is available at Comments are due Dec. 14.


“The primary focus of the concept release is mandatory auditor rotation. Before we determine whether that is in the best interests of investors and the public, we will need to weigh carefully whether its benefits would outweigh its costs and potential unintended consequences,” said PCAOB member Jay Hanson, a former national director of accounting for McGladrey & Pullen LLP and former chairman of the AICPA’s Financial Reporting Executive Committee. “We also need to further analyze our inspection results and other available information to determine whether audit deficiencies are attributable to a lack of auditor objectivity and skepticism and, if so, whether those symptoms are best remedied through mandatory auditor rotation or some other measure.”


If the board determined to move forward with development of a rotation proposal, it would also need to consider whether the requirement should be paired with other changes to existing requirements, the release states. Such procedures could include heightened internal supervision or oversight requirements for the first year or two of a new engagement, increased required communications between predecessor and successor auditors, or other steps auditors could be required to take during the transition from one firm to another.


More from the JofA:


 Find us on Facebook  |   Follow us on Twitter  |   View JofA videos


Year-end tax planning and what’s new for 2016

Practitioners need to consider several tax planning opportunities to review with their clients before the end of the year. This report offers strategies for individuals and businesses, as well as recent federal tax law changes affecting this year’s tax returns.


News quiz: Retirement planning, tax practice, and fraud risk

Recent reports focused on a survey that gauges the worries about retirement among CPA financial planners’ clients, a suit that affects tax practitioners, and a guide that offers advice on fraud risk. See how much you know with this short quiz.


Bolster your data defenses

As you weather the dog days of summer, it’s a good time to make sure your cybersecurity structure can stand up to the heat of external and internal threats. Here are six steps to help shore up your systems.