PCAOB standard for auditing revenue may be on the horizon

BY KEN TYSIAC

Auditing revenue will need to be an area of focus for PCAOB standard setting in the near future, PCAOB member Jay Hanson said in a speech Monday.

FASB and the International Accounting Standards Board are in the closing stages of developing a converged financial reporting standard for revenue recognition. The standard is scheduled to be released in the fourth quarter of 2013, with application required for reporting periods beginning on or after Jan. 1, 2017.

Hanson said the converged standard “will fundamentally change the basis for revenue recognition,” and the PCAOB is monitoring its development.

“It is my hope that the PCAOB will soon devote substantial resources to an audit standard project in this area, and that we will be able to issue a proposal on auditing revenue with sufficient lead time to allow new accounting and auditing standards to become effective at or around the same time,” Hanson said at the Brigham Young University Accountancy Alumni Conference in Provo, Utah.

Auditing revenue is not yet on the PCAOB’s standard-setting agenda. But Hanson said that in view of revenue’s significance, the PCAOB needs to give the issue consideration.

“Revenue is probably the most important number on the financial statements for most investors,” Hanson said. “And it is one in which our inspectors frequently find problems. Revenue recognition also is a complex accounting area.”

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

SPONSORED REPORT

Post-busy season checklist

Now that tax season is over, pause for some introspection to guarantee that next year’s busy season is even better. Bonus: “Dirty dozen” scams list to share with your clients. Sponsored by Thomson Reuters, Bloomberg BNA, Bloomberg BNA // Software and Wolters Kluwer.

QUIZ

News quiz: Risks are top of mind in finance

Americans are worried about risks to their financial security. Accountants also see risks to their organizations and their careers. See how much you know about recent news and reports with this quiz.

CHECKLIST

Auditing risks in culture

Cultural flaws can seriously damage an organization. Here’s how internal auditors can reduce risks by embedding culture audits into existing audit programs.