Small business of-interest, need-to-know and news-to-watch. Article gives you a good background and review of PCAOB, its charter and works in progress. Good information and insights. Recommended for leadership and accounting management.
Excerpt: Since the Public Company Accounting Oversight Board was created 10 years ago by the Sarbanes-Oxley Act, the U.S. system of auditor oversight has been fundamentally reformed to better protect investors and the public interest.
In addition to creating the PCAOB, the Act also vested audit committees with expanded oversight of financial reporting and audit processes.
Initially, the Act was seen as an effort to address problems that appeared to be unique to the U.S., but after numerous financial reporting scandals erupted around the world, the U.S. model of audit regulation was adopted in varying forms in many other countries.
Following the recent financial crisis, we find ourselves in an era with new stresses on financial reporting and auditing around the world, and we are once again evaluating how best to protect investors in this environment.
This is what we are working on at the PCAOB. I would like to tell you about a few “hot topics” related to our core mission of protecting investors through audit oversight, including: ….
Read full article via PCAOB: Protecting Investors and the Public Interest — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
Small business of-interest, need-to-know and news-to-watch. Accounting and audit
Excerpt: Auditing Standard No. 16 is the first standard that the PCAOB has adopted following enactment of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, a new PCAOB standard will not apply to audits of “emerging growth companies” (“EGCs”) unless the SEC determines that the application of the standard is “necessary or appropriate in the public interest, after considering the protection of investors and whether the action will promote efficiency, competition, and capital formation.” At its August 15 meeting, the PCAOB expressed its view that the SEC should approve the application of the new standard to EGCs.
Read full article via PCAOB Adopts New Audit Standard on Communications with Audit Committees — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
An update and opinion on the PCAOB proposed auditor rotation……read the pros and cons presented. What do you think? Rotation would indeed keep everyone on their toes and that isn’t a bad thing, but I well understand the costs and ramp-up time involved for each rotation.
Excerpt…….In short, advocates of auditor rotation identify a real problem: a potential conflict of interest that could dissuade auditors from vigilantly exercising professional skepticism. Although auditor rotation could mitigate this conflict, a mandatory approach would be very expensive and could undermine the role of the audit committee.
Instead, the PCAOB should require the audit committee to issue an RFP for the auditor engagement every 15 years, but allow the existing auditor to participate in the bidding process. Without imposing a rigid system of mandatory rotation, this process would enhance the auditor’s willingness to make tough calls and reinforce its primary allegiance to the independent audit committee
Read full article…….via Search for Auditors; Don’t Rotate — The Harvard Law School Forum on Corporate Governance and Financial Regulation.
Small business need-to-know and news-to-watch……. Accounting and audit
Excerpt……..The Public Company Accounting Oversight Board is proposing a new auditing standard that relates to the auditor’s evaluation of a company’s relationships and transactions with related parties, and amendments to existing auditing standards that relate to significant unusual transactions and financial relationships and transactions by a company with its executive officers (including incentive compensation arrangements). The new and amended standards are intended to focus auditors’ efforts on areas that may pose an increased risk of material misstatement to a company’s financial statements……….
Subject to SEC approval, the new and amended standards would be effective for audits of financial statements for fiscal years beginning on or after December 15, 2012
Read full article………..via New PCAOB Auditing Standards — The Harvard Law School Forum on Corporate Governance and Financial Regulation.