PCAOB standard for auditing revenue may be on the horizon

BY KEN TYSIAC

Auditing revenue will need to be an area of focus for PCAOB standard setting in the near future, PCAOB member Jay Hanson said in a speech Monday.

FASB and the International Accounting Standards Board are in the closing stages of developing a converged financial reporting standard for revenue recognition. The standard is scheduled to be released in the fourth quarter of 2013, with application required for reporting periods beginning on or after Jan. 1, 2017.

Hanson said the converged standard “will fundamentally change the basis for revenue recognition,” and the PCAOB is monitoring its development.

“It is my hope that the PCAOB will soon devote substantial resources to an audit standard project in this area, and that we will be able to issue a proposal on auditing revenue with sufficient lead time to allow new accounting and auditing standards to become effective at or around the same time,” Hanson said at the Brigham Young University Accountancy Alumni Conference in Provo, Utah.

Auditing revenue is not yet on the PCAOB’s standard-setting agenda. But Hanson said that in view of revenue’s significance, the PCAOB needs to give the issue consideration.

“Revenue is probably the most important number on the financial statements for most investors,” Hanson said. “And it is one in which our inspectors frequently find problems. Revenue recognition also is a complex accounting area.”

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

Where to find November’s flipbook issue

The Journal of Accountancy is now completely digital. 

 

 

 

SPONSORED REPORT

Get Clients Ready for Tax Season

This comprehensive report looks at the changes to the child tax credit, earned income tax credit, and child and dependent care credit caused by the expiration of provisions in the American Rescue Plan Act; the ability e-file more returns in the Form 1040 series; automobile mileage deductions; the alternative minimum tax; gift tax exemptions; strategies for accelerating or postponing income and deductions; and retirement and estate planning.