PCAOB urges focus on Risk Assessment Standards

By Ken Tysiac

The PCAOB is urging audit firms to review their systems and procedures to promote compliance with the board’s Risk Assessment Standards.

The Risk Assessment Standards—Auditing Standards (AS) No. 8 through No. 15—were adopted in 2010. The standards address the auditor’s assessment of and response to risk of material misstatements and the auditor’s evaluation of the results of procedures performed in the audit. The standards include:

  • AS No. 8, Audit Risk.
  • AS No. 9, Audit Planning.
  • AS No. 10, Supervision of the Audit Engagement.
  • AS No. 11, Consideration of Materiality in Planning and Performing an Audit.
  • AS No. 12, Identifying and Assessing Risks of Material Misstatement.
  • AS No. 13, The Auditor’s Responses to the Risks of Material Misstatement.
  • AS No. 14, Evaluating Audit Results.
  • AS No. 15, Audit Evidence.

In a report released Thursday, the PCAOB expressed concern over the number and significance of deficiencies in compliance with these standards found in inspections from 2012 through 2014.

The PCAOB encouraged audit firms to review the report and consider the compliance of their practices related to the Risk Assessment Standards. According to the report, examples of remedial actions by firms in this area have included:

  • Enhancing audit methodologies and processes.
  • Developing technical guidance targeted to specific issues.
  • Developing and requiring training targeted to specific issues.
  • Developing new audit tools.
  • Requiring additional audit procedures to provide reasonable assurance of compliance with PCAOB standards.

In addition, the report said some firms have developed automated audit tools, templates, or additional guidance to help their auditors understand the flow of business transactions and to identify the risks of material misstatement and related business controls that may mitigate those risks.

Evaluating engagement partner and manager workloads also can assist in compliance, the report said.

Ken Tysiac (ktysiac@aicpa.org) is a JofA editorial director.


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.