The PCAOB on Tuesday reproposed an auditing standard and amendments designed to improve the quality of auditing of related-party transactions and significant unusual transactions. The reproposed standard is designed to increase the auditor’s focus on the evaluation of how a company identifies, accounts for, and discloses its relationships and transactions
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Audit & assurance
Goal for PCAOB’s Hanson: Best practices list for auditors
PCAOB member Jay Hanson wants to talk to auditors who produce audits with no deficiencies. He’s pushing to develop a “best practices” list that will help and inform the entire profession. “I know that this view isn’t shared universally among the board members of the PCAOB as to whether we
PCAOB to consider related-parties re-proposal
The PCAOB will meet Tuesday to consider re-proposing an auditing standard on related parties. PCAOB member Jay Hanson said Thursday that the board is making the second proposal in response to comments it received on the first proposal, which was made Feb. 28, 2012. More comments will be sought on
Assurance opportunities broaden
Editor’s note: Beth Schneider is the chair of the AICPA Sustainability Task Force under the Auditing Standards Board. Corporate and public interest in sustainability and climate change issues, and voluntary reporting of greenhouse gas (GHG) emissions information, has grown significantly in the United States during the last decade. Companies have
Defending third-party audit claims
Early in the 20th century, audits of company financial statements served merely as verification for management that a company was productive and efficient. After the 1929 stock market crash, the role of the auditor evolved. The Securities Act of 1933 and the Securities Exchange Act of 1934 established requirements for
Auditing
The AICPA Auditing Standards Board (ASB) made a correction to an auditing section in the AICPA Professional Standards to reinforce the board’s intentions not to change practice and to avoid unintended consequences. The auditing (AU) sections were redrafted as part of the clarity project to reflect the ASB’s established
The assurance market for sustainability reporting
Editor’s note: Also read “Assurance opportunities broaden,” May 2013. Research published in The Journal of Business Ethics in 2012 titled “Multinationals’ Accountability on Sustainability: The Evolution of Third-Party Assurance of Sustainability Reports,” explores the third-party assurance market for external corporate social responsibility (CSR) reporting. The authors, Paolo Perego and Ans
Analyzing liquidity using the cash conversion cycle
A good assessment of a company’s liquidity is important because a decline in liquidity leads to a greater risk of bankruptcy. FASB describes liquidity as reflecting “an asset’s or liability’s nearness to cash” (Statement of Financial Accounting Concepts No. 5, Recognition and Measurement in Financial Statements of Business Enterprises). Creditors
New TPAs provide guidance for auditors
The AICPA has issued nonauthoritative guidance in five Technical Question and Answer (TPA) releases, which are available on the AICPA website. TPA 9110.22 provides guidance for auditors when an entity’s financial statements are audited in accordance with generally accepted auditing standards and Government Auditing Standards. When both standards are used,
Europe takes step toward mandatory audit firm rotation
The European Union took a step toward requiring mandatory audit firm rotation Thursday when the European Parliament’s Legal Affairs Committee voted 15–10 in favor of a draft law that would require public-interest entities such as banks, insurance firms, and listed companies to rotate audit firms every 14 years. That period
New PCAOB policy describes rewards for extraordinary cooperation
Registered public accounting firms and auditors whose cooperation with PCAOB investigations is deemed “extraordinary” may be rewarded with reduced penalties in disciplinary proceedings. The PCAOB issued a formal policy statement Wednesday that defines extraordinary cooperation and describes incentives for firms and individuals that make voluntary, extra efforts to aid the
Auditing
Proposed reforms designed to streamline and improve the way the federal government administers more than $600 billion in grants annually have been published by the Office of Management and Budget (OMB). The OMB is proposing broad reforms to compliance audits performed under OMB Circular A-133, Audits of States, Local
PCAOB attempting to make auditing standards easier to navigate
The PCAOB on Tuesday took the first step toward what’s intended to be a comprehensive reorganization of its auditing standards. Board members unanimously voted to publish a proposal for a framework that would place the PCAOB’s auditing standards into a topical structure with a single, integrated numbering system. The board
Technical practice aids address questions on audits of group financial statements
Nonauthoritative guidance arising from implementation issues is provided in 16 additional Technical Questions and Answers (TPAs) included as paragraphs .24 to .39 of TIS Section 8800, “Audits of Group Financial Statements and Work of Others.” Implementation issues, particularly regarding equity investments, are addressed in the guidance for AU-C Section 600,
Auditors required to modify New York City form
Auditors providing an opinion on operating income and expenses for New York City Tax Commission certiorari filings are required to modify a certification form to comply with new standards, according to the AICPA. Under those conditions, auditors are required to modify Form TC309, Accountant’s Certification, to comply with new generally
CAQ educational guide describes internal control process
A new guide released Thursday by the Center for Audit Quality (CAQ) is designed to educate investors and the general public on a process that reinforces reliable financial reporting at U.S. public companies. The CAQ’s Guide to Internal Control Over Financial Reporting describes how companies enhance the reliability of their
PCAOB may propose reorganization of auditing standards
The PCAOB is considering proposing a reorganization of its auditing standards that would be designed to present them in a logical order that generally follows the flow of how an audit is conducted. An open meeting of the board has been scheduled for 9:30 a.m. Tuesday to consider issuing for
ASB corrects clarified auditing standard AU-C 920
The AICPA Auditing Standards Board (ASB) has made a correction to an auditing section in the AICPA Professional Standards to reinforce the board’s intentions not to change practice and to avoid unintended consequences. The auditing (AU) sections were redrafted as part of the clarity project to reflect the ASB’s established
New AICPA not-for-profit guide available
A new, greatly enhanced AICPA audit and accounting guide, Not-for-Profit Entities, is available in ebook form. The AICPA Auditing Standards Board (ASB), Financial Reporting Executive Committee (FinREC) and Not-For-Profit Guide Task Force have revised the guide, making significant enhancements to improve user understanding and minimize diversity in practice. Enhancements include:
Avoid audit deficiencies
Fair value measurements (FVMs) and asset impairment testing were among the most prevalent deficiencies found in audits in the wake of the economic crisis of 2008. Consulting firm Acuitas Inc. gives tips on how to mitigate some of the more common trouble spots: Examine projected financial information (PFI) assumptions. Assess
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Preparing clients for new provisions next tax season
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