The PCAOB issued a proposed new standard Tuesday designed to strengthen and modernize the requirements for the auditor's use of confirmation.
Comments on the proposal will be accepted through Feb. 20, 2023.
"During times of economic uncertainty, the risk of fraud is heightened, and auditors have to be more vigilant than ever," PCAOB Chair Erica Y. Williams said in a news release. "When done right, confirmation can be a critical tool to help auditors combat fraud and keep investors protected."
The proposed standard would replace AS 2310, The Confirmation Process, with a new proposed standard, AS 2310, The Auditor's Use of Confirmation, and make conforming amendments to certain related PCAOB auditing standards. The standard, originally developed by the AICPA in 1991, has had minimal amendments since the PCAOB adopted it as an interim standard in 2003, shortly after the board's formation.
Part of the PCAOB proposal reads: "The new proposed standard is designed to improve the quality of audits when confirmation is used by the auditor and to reflect changes in the means of communication and in business practice since the standard was originally issued."
The proposed standard also includes principles-based requirements that would apply to all methods of confirmation, including paper-based and electronic communications. The proposal, if adopted, is expected to better integrate the PCAOB's confirmation standard with its risk assessment standards.
— To comment on this article or to suggest an idea for another article, contact Kevin Brewer at Kevin.Brewer@aicpa-cima.com.
