The Auditing Standards Board (ASB) of the AICPA authorized an interpretation of AU section 330, The Confirmation Process, clarifying whether electronic confirmations can be considered to be reliable audit evidence. The interpretation clarifies that if the auditor is satisfied that the electronic confirmation process is secure and properly controlled and the confirmation is directly from a third party who is a bona fide authorized respondent, electronic confirmations may be considered as sufficient, valid confirmation responses.
The PCAOB for a second time delayed application of Rule 3523, Tax Services for Persons in Financial Reporting Oversight Roles, to situations where firms provide tax services to a client before they become the client’s auditor. The audit independence rule, which forbids firms from providing tax services during an “audit and professional engagement period” to persons who financially oversee an audit client or to members of their immediate families, otherwise took effect in 2006. The board continued to deliberate, however, whether firms were barred from accepting engagements with new clients to whom they had provided tax services during what then would retroactively become an audit period. In April, when the rule was scheduled to take effect in such instances, the PCAOB extended implementation until July 31. The board requested comments through May 18, saying it would consider whether existing standards of auditor independence could allow Rule 3523 to refer simply to engagement periods.
The PCAOB also issued staff opinions on how to determine whether a person oversees financial reporting for an audit client within the meaning of the rule. That document, available at www.pcaobus.org/Standards/, also discusses applications of confidentiality and independence provisions of Rule 3522, Tax Transactions.
The ASB approved a discussion paper, Improving the Clarity of ASB Standards, seeking feedback on four issues including structural and drafting improvements to make Statements on Auditing Standards (SAS) easier to read and understand. Also being considered are revisions to add an objective for each SAS and a glossary of terms in each SAS and to include special considerations in audits of public-sector and small entities in the explanatory material of a SAS. To view a sample of the proposed changes, go to www.aicpa.org/download/auditstd/ . Written comments are requested by June 15.