The Dodd-Frank Wall Street Reform and Consumer Protection Act, which became law in July, will create new regulations for companies that extend credit to consumers, exempt small public companies from Sarbanes-Oxley section 404(b), make auditors of broker-dealers subject to PCAOB regulation and change registration requirements for investment advisers. The profession
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Audit & assurance
FASB Loss Disclosures Proposal Conflicts With AICPA-ABA Agreement
The AICPA’s Financial Reporting Executive Committee (FinREC) told FASB in a comment letter issued Monday that it has concerns about auditors’ ability to corroborate information on loss contingencies with the client’s legal counsel until the AICPA and the American Bar Association can update a longstanding agreement that details information attorneys
PCAOB Focusing In on SOX Provisions
The PCAOB on Thursday issued a release discussing certain provisions of the Sarbanes-Oxley Act of 2002 (SOX). The two-part release focuses on the application of the act’s section 105(c)(6), which authorizes the PCAOB to sanction registered firms and their supervisory personnel for failing to “reasonably supervise” associated individuals who violate
PCAOB Adopts Suite of Risk Assessment Standards for Audits
The PCAOB on Thursday adopted a suite of eight auditing standards, Auditing Standards (AS) no. 8 through no. 15, that the board said would enhance the effectiveness of the auditor’s assessment of, and response to, the risks of material misstatement in financial statements. The risk assessment standards address audit procedures
AICPA Alert for Auditors of Nonpublic Broker-Dealers
Editor’s note: This alert was compiled by Teighlor S. March, J.D., Senior Manager, Legal, Legislative & Regulatory Affairs for the AICPA. On July 15, 2010, a PCAOB Standing Advisory Group meeting was held in Washington, D.C., to discuss various current topics, including the issue of PCAOB oversight and inspection over
Replacing SAS 70
Guidance for CPAs who audit the financial statements of entities that outsource work to service organizations and those who report on controls at service organizations is being revamped and relocated. Since 1992, Statement on Auditing Standards (SAS) no. 70, Service Organizations, has been the source of the requirements and guidance
Highlights
The U.S. Supreme Court issued a long-awaited ruling in the constitutional challenge to the PCAOB that left the agency virtually unchanged. The court’s 5–4 decision, announced in June, will not affect day-to-day operations of the PCAOB, the agency said. Chief Justice John Roberts wrote the majority opinion. In it,
PCAOB Proposes Higher Evidence Standards in Audit Confirmations
The PCAOB released for comment a proposed auditing standard that it says would update and expand the requirements related to the auditor’s use of confirmations, requiring a high level of evidence. In a statement issued with the proposed new standard on Tuesday, PCAOB Acting Chairman Daniel L. Goelzer said the
Former PCAOB and Fed Official Joins Center for Audit Quality
The Center for Audit Quality (CAQ) on Wednesday announced that former PCAOB and Federal Reserve Board official Angela Desmond has joined the center as senior director of external relations. Desmond comes to the AICPA-affiliated CAQ from Corporate Risk Advisors LLC, a Washington-based consulting and strategic advisory firm specializing in the
Common Question-Evasion Tactics
In her book Extraordinary Circumstances: The Journey of a Corporate Whistleblower, Cynthia Cooper, WorldCom Inc.’s chief audit executive, details the discovery of a fraud that she was able to unravel, in large part, due to her interviewing skills. At a critical point in Cooper’s investigation, Buddy Yates, WorldCom’s general director
Auditing
The AICPA prepared a set of questions and answers to help explain the changes resulting from the issuance of Statement on Standards for Attestation Engagements no. 16, Reporting on Controls at a Service Organization, by the Auditing Standards Board. SSAE no. 16 applies when data resulting from an outsourcing
Little Change for PCAOB Under High Court Ruling
The Supreme Court’s 5–4 decision Monday in the constitutional challenge to the PCAOB will leave the agency virtually unchanged. The court’s ruling will not affect day-to-day operations of the PCAOB, the agency said. Chief Justice John Roberts wrote the majority opinion. In it, he said the court was isolating, or
Supreme Court Expected to Rule Soon on PCAOB’s Constitutionality
A decision is expected soon in Free Enterprise Fund v. Public Company Accounting Oversight Board, a Supreme Court case that calls into question the future of Sarbanes-Oxley (SOX) and the PCAOB. So what happens if the court rules against the PCAOB? “A key question is how far an adverse ruling would go,”
FAQ Outlines New Service Organization Standards
The AICPA has developed a set of questions and answers to help explain the changes resulting from the recent issuance of Statement on Standards for Attestation Engagements No. 16, Reporting on Controls at a Service Organization, by the AICPA’s Auditing Standards Board. SSAE No. 16 is applicable when an entity
The Recovery Act: An Auditee’s Perspective
In response to the severe economic crisis, the $787 billion American Recovery and Reinvestment Act (Recovery Act) became law in February 2009. The primary goal of this act was to create and save jobs and stimulate long-term economic growth. Only $275 billion of the Recovery Act funds allocated for contracts,
News Highlights for June 2010
The PCAOB proposed for comment an auditing standard, Communications with Audit Committees, and a series of related amendments to its interim standards. The proposal includes a requirement for the auditor to establish a mutual understanding of the terms of the audit engagement with the audit committee and to document that
Risk Assessment Standards Clarified
The Auditing Standards Board recently issued six clarified Statements on Auditing Standards related to risk assessment resulting from its clarity project, through which all of its auditing standards will be redrafted over the next one to two years. The board also issued additional proposed SASs. The goal of the clarity project
FAQs: Significant Change to Compilation Reporting Requirements When Independence Is Impaired
Editor’s note: This list of FAQs is a Web-exclusive sidebar to “Changes on Tap for Compilation and Review Standards,” May 2010. Question: To what compilation engagements does SSARS no. 19 apply? Answer: SSARS no. 19 applies to compilations of financial statements and other specified elements, accounts or items
News Highlights for May 2010
The Auditing Standards Board recently issued six clarified Statements on Auditing Standards related to risk assessment resulting from its clarity project, through which all of its auditing standards will be redrafted over the next one to two years. The board also issued additional proposed SASs. The goal of the clarity
Auditing
The AICPA’s Audit and Attest Standards staff has issued Technical Practice Aid (TPA) 9110.16, Example Reports on Federal Deposit Insurance Corporation Loss Sharing Purchase and Assumption Transactions, to provide guidance to independent auditors on the type of report they might have to give to the FDIC regarding a loss-sharing
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