PCAOB continues focus on audits of internal control over financial reporting

BY KEN TYSIAC

The PCAOB maintained its focus on audits of internal control over financial reporting (ICFR) Thursday by issuing its second report in 11 months on the subject.

Staff Audit Practice Alert No. 11, Considerations for Audits of Internal Control Over Financial Reporting, discusses application of PCAOB standards to audits of internal control, including discussion of:

  • Auditors’ risk assessment and the audit of internal control.
  • Selecting controls to test.
  • Testing management review controls.
  • Information technology considerations, including system-generated data and reports.
  • Roll-forward of control testing performed at an interim date.
  • Using the work of others.
  • Evaluating identified control deficiencies.


“Auditors should take note of the matters discussed in this alert in planning and performing their audits, given the importance of the controls companies use to produce their financial statements,” PCAOB Chairman James Doty said in a news release.

The PCAOB also issued a report in December of last year to inform auditors on common problems to avoid in audits of internal control over financial reporting.

PCAOB Chief Auditor Martin Baumann said in a news release that engagement partners, senior engagement team members, and engagement quality reviewers should keep these matters in mind. Baumann also said auditing firms should consider whether additional training of their personnel is needed.

The release said audit committees of public companies for which audits of internal control are conducted may want to take note of the alert.

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

SPONSORED REPORT

Tax reform changes are now in effect

With all the recent tax law changes, this year it’s more important than ever to make sure your clients’ tax situations are squared away before year end. This report provides necessary guidance to ensure 2019 starts without a hitch.

PODCAST

Using drones to enhance audits

Hermann Sidhu, CPA, global assurance digital leader at EY, walks us through EY’s exciting new project to use drones to help audit large warehouses and outdoor inventories.