The PCAOB released its Staff Overview for Planned 2022 Inspections on Thursday, highlighting 10 areas of focus.
The PCAOB highlighted the following planned 2022 inspection areas:
- Fraud and other risks;
- Initial public offerings (IPOs) and mergers and acquisitions (M&A) activity;
- Audit firms' execution challenges;
- Broker-dealer-specific considerations;
- Independence;
- Use of service providers in the confirmation process;
- Critical audit matters;
- Audit areas with continued deficiencies;
- Firms' quality control systems; and
- Technology.
The PCAOB said the areas of focus were based on audit risks driven by several recent developments in the economic environment: an increase in IPOs and M&A activities (including transactions with special-purpose acquisition companies); supply chain disruptions; continued COVID-19 effects; increased volatility in financial markets; and audit firmwide risks, such as "the heightened degree of staff turnover and risks arising from auditing in a remote environment."
The inspections report also offered five key reminders to auditors:
- Exercise professional skepticism in evaluating the reasonableness of management's representations, estimates, and forecasts.
- Consider risks related to remote-working environments.
- Remain alert to changes and circumstances that could impair auditor independence.
- Consider implications arising from the current economic environment while performing procedures for acceptance and continuance of clients and engagements.
- Evaluate decisions made in a supervisory role related to engagement team members' ability to perform assigned work.
The PCAOB also reminded auditors about potential pitfalls related to Russia's invasion of Ukraine, suggesting that auditors refer to a previous PCAOB report, Auditing Considerations Related to the Invasion of Ukraine.
— To comment on this article or to suggest an idea for another article, contact Bryan Strickland at Bryan.Strickland@aicpa-cima.com.
