News highlights for August 2014

In a time of technological innovation, business complexity, and regulatory scrutiny, auditors face a multitude of challenges.

Auditors are expanding services at the same time that regulators are considering ways to make the information in the auditor’s report even more relevant for investors.

To serve the public in this time of rapid change, the AICPA is embarking on a new, comprehensive initiative to reinforce the CPA profession’s commitment to audit quality. AICPA Senior Vice President Sue Coffey, CPA, CGMA, described the Enhancing Audit Quality initiative during a presentation at the AICPA’s spring Council meeting in Scottsdale, Ariz.

• The AICPA is taking a holistic approach designed to enhance monitoring of the quality of practitioners’ audit and attestation practices and support members with the best guidance, tools, and resources in accounting and auditing. The AICPA plans to use a two-phased approach, beginning in the near term with these efforts:
• Monitor execution of the Auditing Standards Board’s (ASB) clarified auditing and quality-control standards and make modifications where necessary. Evaluate the need for related segmented guidance to provide greater specificity and clarity in an environment that is rapidly moving toward specialization and industry-specific requirements with focused procedures on entry into new industries.
• Create new tools, professional development strategies, and resources, including new initiatives sparked by the AICPA Future of Learning task force, and new alerts and accounting and auditing guides. The work of the ASB, the AICPA’s Audit Quality Centers, and the new Center for Plain English Accounting will be key components for driving quality.

Change the existing peer review program to better monitor and evaluate the quality of peer reviewers, make peer review results more informative to users, and deepen peer review on high-risk industries and areas of concern. A team of accounting and auditing experts will be created to help evaluate engagements, firms, and reviewers; identify root causes of audit deficiencies; and work with stakeholders to address these problems.

In the long term, the initiative will work to develop a new practice monitoring program to increase public protection by detecting engagement deficiencies earlier and enabling timely corrections of deficiencies. The program will develop systems that capture and include all firms and all engagements that should be subject to review.

The AICPA will engage the state and federal regulatory community in solutions, partner with state CPA societies in these efforts, and solicit professionwide comment. A discussion paper scheduled to be released this summer will describe plans and ideas that will be at the core of this initiative and will seek input from all stakeholders, including members, regulators, and other interested parties. An additional concept paper to be released in the fall will describe strategies for transforming practice monitoring for the future and also will solicit feedback.