Panelists voiced opposing views of mandatory audit firm rotation Wednesday during the first of two days of PCAOB hearings on the concept. Critics of mandatory rotation said it would be costly with questionable benefits, while proponents said rotation would increase auditors’ objectivity. Many panelists proposed strategies other than rotation that
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Audit & assurance
PCAOB reopens comment period on audit firm rotation concept release
The PCAOB has reopened its comment period regarding a debated concept release on auditor independence and audit firm rotation. The original comment period closed Dec. 14. The new deadline is April 22, the PCAOB said Wednesday. The board extended the deadline to incorporate comments following a March 21–22 public meeting
PCAOB outlines related parties proposal, other amendments
The PCAOB on Tuesday issued for public comment a proposed auditing standard on related parties and proposed amendments on significant unusual transactions. The board said the proposals are designed to improve auditors’ focus on certain areas of risk. In addition, the PCAOB proposed amendments to its rules and forms to
Auditing
The AICPA’s Auditing Standards Board (ASB) issued Proposed Statement on Auditing Standards (SAS), The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (Redrafted), resulting from its Clarity Project, to supersede SAS no. 59, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern,
COSO Chair says updated framework is a ‘refresh’
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) issued an exposure draft seeking comments on an updated internal control framework designed to help organizations perform with efficiency and confidence. COSO Chairman David Landsittel and the JofA discussed the updated framework, which keeps the same definitions, objectives and five
Management of “risk appetite” a necessity, paper says
In order to balance risks and opportunities, organizations must develop, communicate, monitor and update their “risk appetites,” according to a white paper released Friday by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Authored by University of Wisconsin-Madison accounting professor Larry Rittenberg and Frank Martens, a director in the
Guidance available on Early Retirement Reinsurance Program payments
The AICPA issued Technical Practice Aids (TPAs) 6931.13–.17 to provide nonauthoritative guidance on health and welfare plan accounting and reporting for reimbursements received under the Patient Protection and Affordable Care Act’s (PPACA) Early Retirement Reinsurance Program (ERRP). The TPAs describe the ERRP and cover matters such as how to report
Technical Practice Aids issued on SOC reports
The AICPA issued Technical Practice Aids (TPAs) 9520.12–.26 to provide nonauthoritative guidance regarding Statement on Standards for Attestation Engagements (SSAE) no. 16, Reporting on Controls at a Service Organization (AICPA, Professional Standards, AT sec. 801). The TPAs provide guidance for service auditors reporting on controls at a service organization relevant
ASB issues clarified SAS
The AICPA’s Auditing Standards Board issued Statement on Auditing Standards (SAS) no. 125, Alert That Restricts the Use of the Auditor’s Written Communication. The SAS, which is part of its Clarity Project, supersedes SAS no. 87, Restricting the Use of an Auditor’s Report (AICPA, Professional Standards, AU sec. 532 and
The 20 most popular stories of 2011
We tallied the traffic on journalofaccountancy.com to determine 2011’s most popular JofA articles and news. Use the lists below to catch up on important news and professional developments you may have missed in the past year. Here are the most popular feature articles of 2011 from the JofA’s monthly print
Auditing
As a result of the Small Business Lending Fund created by the Small Business Jobs Act of 2010, the AICPA Audit and Attest Standards staff has issued Technical Practice Aid (TPA) 9110.18, “Small Business Lending Fund Auditor Certification Guidance,” to provide guidance on how an independent auditor may certify that
PCAOB Reproposes Standard on Communications with Audit Committees
The PCAOB on Tuesday reproposed for comment an audit standard, Communications with Audit Committees, and related amendments to PCAOB standards. Initially, the standard was proposed on March 29, 2010. According to a PCAOB news release, the reproposed standard is designed to align communications requirements with performance demands in other PCAOB
AICPA Letter to PCAOB Raises Concerns About Mandatory Audit Firm Rotation
The AICPA recommended that the PCAOB refrain from imposing mandatory audit firm rotation. AICPA Chairman Greg Anton, and President and CEO Barry Melancon signed a comment letter sent by email Wednesday to the PCAOB stating that mandatory audit firm rotation is costly and has the potential to hinder audit quality
New Auditors’ Reporting Model Proposal Set for Release in Q2
The PCAOB’s proposal for a new auditors’ reporting model should be completed by the second quarter of 2012, PCAOB Chairman James Doty said Monday. Speaking at the AICPA’s National Conference on Current SEC and PCAOB Developments in Washington, Doty gave an update on the PCAOB’s initiative on the form and
PCAOB Boosts Budget 11.4% to Accommodate Increased Inspections
The PCAOB has increased its budget for the 2012 fiscal year by 11.4%, or $23.3 million, over the 2011 budget, according to a news release. The 2012 budget is approximately $227.7 million, compared with $204.4 million for the 2011 fiscal year. The budget is subject to SEC approval. Staffing and
Auditing
The PCAOB published a Staff Audit Practice Alert to increase auditors’ awareness of risks when performing audits of companies with operations in emerging markets. Specifically, the alert cited a number of reports originating from audits of companies based in the People’s Republic of China. Staff Audit Practice Alert no.
European Commission Proposes Regulatory Changes for Audits
The European Commission today proposed sweeping regulations that would, if approved, trigger major changes in the relationships between European public companies and their auditors. The changes include: Limiting to six years the period that an outside auditing firm can perform audits for a company. A cooling-off period of four years
Q&A Issued on Small Business Lending Fund Auditor Certification
As a result of the Small Business Lending Fund enacted into law as part of the Small Business Jobs Act of 2010, the AICPA Audit and Attest Standards staff has issued Technical Practice Aid (TPA) 9110.18, “Small Business Lending Fund Auditor Certification Guidance.” The aid provides guidance on how an
Auditing
AICPA staff issued TPA 9160.27, “Providing Opinion on a Schedule of Expenditures of Federal Awards [SEFA] in Relation to an Entity’s Financial Statements as a Whole When the Schedule of Expenditures of Federal Awards Is on a Different Basis of Accounting Than the Financial Statements.” Provided certain conditions are
ASB Reaches Major Clarity Project Milestone
The AICPA’s Auditing Standards Board has achieved a major milestone in its Clarity Project with the issuance of Statement on Auditing Standards (SAS) nos. 122–124. The publication includes a total of 40 finalized clarified SASs in the following statements: SAS no. 122, Statements on Auditing Standards: Clarification and Recodification SAS
Features
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