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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