Premium Essay

Pcaob

In:

Submitted By vickychan990
Words 654
Pages 3
PCAOB Proposes a New Auditing Standard to Enhance the Auditor...

http://pcaobus.org/News/Releases/Pages/08132013_OpenMeeting.aspx

Stay Connected:

PCAOB Proposes a New Auditing Standard to Enhance the Auditor's Reporting Model
Also Proposes a New Related Auditing Standard on the Auditor’s Responsibilities for Other Information in an Annual Report
Washington, DC, Aug. 13, 2013
The Public Company Accounting Oversight Board today proposed for public comment a new auditing standard and related amendments to enhance the auditor's reporting model. The proposed standard would retain the pass/fail model in the existing auditor's report, but would provide additional information to investors and other financial statement users about the audit and the auditor. "These proposed changes will make the auditor's report more relevant to investors," said James R. Doty, PCAOB Chairman. "More robust audit reports that demonstrate the strength and value of the audit also should lead to better public awareness of, and appreciation for, auditors' skill and insight." In 2010 and 2011, PCAOB staff conducted outreach to investors, auditors, preparers of financial statements, audit committee members, and other interested parties to seek their views on potential changes to the auditor's report. The staff presented its findings to the Board at an open meeting in March 2011. In June 2011, the Board issued a Concept Release to seek public comment on potential changes to the auditor's reporting model. Additionally, in September 2011, the Board held a public roundtable to obtain insight from a diverse group of investors and other financial statement users, preparers of financial statements, audit committee members, and auditors on the alternatives presented in the Concept Release. The proposed auditor reporting standard would require: the communication of critical audit matters as

Similar Documents

Premium Essay

Pcaob

...On December 4, 2013, the PCAOB re-proposed amendments to its standards that would improve the transparency of public company audits. The amendment is made up of two parts which includes disclosing names, locations, and the extent to which other independent accounting firms took part in the audit, as well as disclosing the name of the engagement partner in the auditor's report. Though both issues have definitely caused a stir in the accounting profession, disclosing the name of the engagement partner has sparked many more debates among professionals. While the PCAOB believes that this requirement will be of great help to improve the transparency, there are many others who believe that the disclosure is just “a solution in search of a problem”. (Frenzel, 2014) A benefit that this proposed amendment will bring to the profession is that it has the potential to make auditors more accountable. The audit partner will feel more responsible for the work that is being performed, as his/her name will be attached to the report. In response, this increased feeling of responsibility will encourage better performance on their part, which will cascade down to the entire engagement team. This means that auditors will be more thorough, decreasing the chances of discrepancies, and therefore improving the quality of audits. Additionally, disclosing the name of the engagement partner would provide investors with more information, which would benefit both them and the public. Including the name...

Words: 757 - Pages: 4

Premium Essay

Pcaob

...Audit Report * The auditor's report is the primary means by which the auditor communicates to investors and other users of audited financial statements regarding its opinion on those statements. * discussed its standard-setting initiative on the auditor's reporting model, and outlined plans to conduct outreach to identify additional investor and user needs to present to the Board * The auditor is in a unique position to provide relevant and useful information, because of the auditor's extensive knowledge of the company and as an independent third-party * several alternatives for changing the auditor's reporting model and is seeking specific comment on these or other alternatives that could provide investors with more transparency in the audit process and more insight into the company's financial statements or other information outside the financial statements. These alternatives include: * An auditor's discussion and analysis; * Required and expanded use of emphasis paragraphs; * Auditor assurance on other information outside the financial statements; and, * Clarification of language in the standard auditor's report. Partner’s Information Disclosed * the Board did not include in this proposal a requirement to sign the engagement partner's name on the audit report. Instead, the proposal would require that the engagement partner's name be disclosed in the audit report, which would make the engagement partner's name readily available to the...

Words: 727 - Pages: 3

Premium Essay

Pcaob Assignment

...ACCT 460 PCAOB Assignment Summer 2015 Dr. Thompson Use the PCAOB website (www.pcaob.org) to answer the following questions: 1. How many Members of the Board are there for the PCAOB? Give their names. The Board – 5 members James R. Doty – Chairman Lewis H. Ferguson – Board Member Jeanette M. Franzel – Board Member Jay D. Hanson – Board Member Steven B. Harris – BM 2. Describe the PCAOB’s annual fee structure for registered firms. The registration fee will be computed individually for each firm submitting a Form 1 and will be based on the number of issuer clients that an applicant audited during the preceding calendar year. A table showing this fee is set forth below. Preceding Year Issuer Clients | Fee | 0-49 | $500 | 50-100 | $3,000 | 101-1000 | $29,000 | >1001 | $390,000 | 3. How many Auditing Standards has the PCAOB issued? What are interim standards? There are 18 Auditing Standards have been adopted by the PCAOB and approved by the SEC were written by the form of AS No. xx In April 2003, the Board adopted certain preexisting standards as its interim standards. Pursuant to Rule 3200T, Interim Auditing Standards consist of generally accepted auditing standards, as described in the AICPA's Auditing Standards Board's Statement of Auditing Standards No. 95, as in existence on April 16, 2003, to the extent not superseded or amended by the Board. (49 counts) 4. How often are registered firms inspected? The PCAOB regularly inspects...

Words: 684 - Pages: 3

Premium Essay

Pcaob Reporting

...Case Study 2: A Practical Guide to the New PCAOB Reporting Requirements Forensic Accounting: ACC-571 January 28, 2012 A Practical Guide to the New PCAOB Reporting Requirements Created by the Sarbanes-Oxley Act of 2002, the Public Company Accounting Oversight Board or PCAOB requires auditors of U.S. public companies be subject to external and independent oversight. Congress established the PCAOB in order to protect investors and the public interest by promoting accurate, informative, and independent audit reports. The PCAOB aims to improve audit quality, reduce the risks of auditing failures in the U.S. public securities market and promote public trust in both the financial reporting process and auditing profession. (PCAOB, 2012). During this case study I will justify how the reporting requirements of the PCAOB reduce the chance of financial fraud, illustrate the responsibilities of an auditing firm to detect fraud during the audit process, recommend alternatives to the PCAOB, and lastly prepare a sample timeline for PCAOB reporting. How the reporting requirements of the PCAOB reduce the chance of financial fraud: PCAOB necessitate senior financial managers to enforce a code of conduct (Advisory Report, 2003). The purpose of the code of conduct is to encourage honesty and ethical conduct, compliance to relevant regulations, and also promote full, accurate and timely disclosure in financial reports. As a result, the PCAOB reduces chances of financial fraud by ensuring...

Words: 1215 - Pages: 5

Free Essay

Pcaob How Effective

...PCAOB: How Effective is this Board? Enforcement Trends The Public Company Accounting Oversight Board, otherwise known as the PCAOB, was created by the Sarbanes-Oxley Act of 2002. This board is created to make sure that all CPA firms are in compliance with the standards that have been set by SOX. The PCAOB has developed throughout the years and their primary focus is on high-risk clients and detecting fraud. When the board decides to investigate a firm, they have two types of investigations to choose from: informal and formal investigations. Generally an informal investigation starts when there is a complaint alleging or indicating that there is a violation taking place. If there is enough information and evidence obtained, then this leads to the formal investigation. After the investigation, the PCAOB has to determine whether a disciplinary proceeding will be warranted. This results when there is a violation of any rule of the board, any provision of the Sarbanes-Oxley Act, the provisions of the securities laws, or any professional standard. It is being noticed that the PCAOB has a very positive effect in the financial world since being established after huge fiscal scandals. It has been found that the PCAOB inspection process causes an improvement in the quality of audits along with significant reduction in abnormal accruals. This board has a strong enforcement process when dealing with violations. It is also safe to say that the PCAOB is an effective part of proper accounting...

Words: 500 - Pages: 2

Premium Essay

Role and Function of Pcaob

...Role and function of the PCAOB and AS 5 and AS 11 Ramecha Davis This paper is submitted in partial fulfillment of the requirements for Auditing BUS5423 Section 70 Texas Woman’s University Dr. John Nugent April 20, 2015 Abstract The purpose of this research paper is to provide an in depth review of the Public Company Accounting Oversight Board (PCAOB) and how it contributes to the interest of the Sarbanes Oxley Act of 2002. The research highlights the importance of the PCAOB’s role in the accounting profession as well as prospective changes that may evolve in the future related to PCAOB. Upon reading this research the reader will be familiar with PCAOB’s roles and functions, as well as auditing standards (AS) released such as AS5 and AS11. The PCAOB’s significance in the protection of investors is revealed as well. Keywords: SEC, PCAOB, SOX, AS 5, AS 11, Internal Control, Materiality Table of Contents Introduction……………………………………………………………………………………………….5 PCAOB…………….……………………………………..……………………………….……….……5-6 a) The PCAOB Mission, Vision, & Core Values………………………………….………........6-7 b) Current Standards…………………………………………………………….…..............…7-8 c) Future Standard Plans…………………………………………………………………….…8-9 Sarbanes Oxley Act of 2002 Section 404……………………………………………………………...….9 a) Auditing Standard 5…………………………………………………………………….….9-10 b) Auditing Standard 11……………………………………………………………………..10-12 c) Communication Requirements..............................

Words: 4910 - Pages: 20

Premium Essay

Sox and Pcaob Discussion

...The Sarbanes-Oxley act was created in 2002, requiring companies to have more sufficient internal control over their financial statements. The old “I wasn’t aware of that” from executives is no longer acceptable and in fact can result in jail time for the executives and others involved. The company can also lose their exchange listing, lose of D&O insurance or face large 7+ figure fines. The act was a direct response to corporate scandals, such as WorldCom, Enron and Tyco who covered up or misrepresented questionable transactions. The scandals resulted in large losses including the closure of Enron and Arthur Anderson. This act applies to all US public companies as well as international companies that have “registered equity or debt securities with the Securities and Exchange Commission and the accounting firms that provide auditing services to them”. (Sarbanes-Oxley Essential Information) While the intention was good, I do not feel the benefits out way the costs, particularly for smaller public companies. In an article in The CPA Journal, it lists out some of the expected costs based on a survey completed by PricewaterhouseCoopers in June 2003. The article states the direct costs associated with this act are the accounting and auditing fees. The survey estimated $2 million in first-year compliance, 12,000 hours of internal work, 3,000 hours of external work and additional audit fees of $590,000. (D'Aquila) While large companies may be able to afford these types...

Words: 547 - Pages: 3

Premium Essay

Pcaob Audit Standard

...Public Company Accounting Oversight Board Bylaws and Rules – Standards – AS3 AUDITING STANDARD No. 3 – Audit Documentation June 9, 2004 AUDITING AND RELATED PROFESSIONAL PRACTICE STANDARDS Auditing Standard No. 3 – Audit Documentation [Effective pursuant to SEC Release No. 34-50253; File No. PCAOB-2004-05, August 25, 2004] 302 As of February 15, 2005 Public Company Accounting Oversight Board Bylaws and Rules – Standards – AS3 Auditing and Related Professional Practice Standards Auditing Standard No. 3, Audit Documentation [supersedes SAS No. 96, Audit Documentation] Introduction 1. This standard establishes general requirements for documentation the auditor should prepare and retain in connection with engagements conducted pursuant to the standards of the Public Company Accounting Oversight Board ("PCAOB"). Such engagements include an audit of financial statements, an audit of internal control over financial reporting, and a review of interim financial information. This standard does not replace specific documentation requirements of other standards of the PCAOB. Objectives of Audit Documentation 2. Audit documentation is the written record of the basis for the auditor's conclusions that provides the support for the auditor's representations, whether those representations are contained in the auditor's report or otherwise. Audit documentation also facilitates the planning, performance, and supervision of the engagement, and is the basis for the review of the quality...

Words: 9903 - Pages: 40

Premium Essay

The Role and Function of Pcaob and as 5

...Abstract This paper discusses the role and function of the Public Company Accounting Oversight Board (PCAOB) and Auditing Standard 5 (AS 5). Due to the increased demand for oversight in auditing standards, this paper also examines the impact of Sarbanes-Oxley (SOX) and the reasons for the creation of the PCAOB, as well as the implementation of the rules and regulations. Additionally, this paper examines the impact of AS 5. Keywords: audit, AS 5, financial statements, PCAOB, SEC, SOX Table of Contents Introduction ………….……………………………………………………..……………………4 Scandals ...…..……………………………………...……………………………………………4 PCAOB Mission and Vision …………………… ……………………………………………….5 Structure ………………………….……………..……………………………………………5, 6 PCAOB's Objective….…….……..…………………………………………………………….6, 7 Duties ………………………….…..………………………………………………….……… 7, 8 Standard Setting………..………………………………………………………………..……..…8 Inspection ………………………………………………………………………………………..8 Enforcement…………..………………………………………………………………..……...8, 9 AS5 .…………………….…………………………………………………...…………….…9, 10 Conclusion………………………………………………………………………….....……. 10 References …………………………………………………………………………………….. 11 History of PCAOB …………………………………………………………………… 13-19 Introduction Sarbanes-Oxley (SOX) was passed in 2002 and as a result brought numerous changes to auditing. The Sarbanes-Oxley was passed in direct response to business failures, allegations of corporate improprieties and financial statement restatements. Prior to the SOX passage, auditors used a...

Words: 4474 - Pages: 18

Premium Essay

Pcaob Research Assignment

...http://pcaobus.org/Standards/Auditing/Pages/default.aspx 1. After the report release date – can the auditor delete or discard or add information to the audit work papers? Information cannot be deleted or discarded from the audit work papers after the report release date, but information can be added to the work papers after the release date. 2. Certain audit matters may be documented in a central repository for the public accounting firm or in the particular office participating in the engagement. What matters may be documented in this manner and does the specific engagement’s audit documentation need to include a reference to such matters? Matters such as auditor independence, staff training and proficiency, and client acceptance and retention may be documented in a central repository. Also, yes, the specific engagement’s audit documentation needs to include a reference to the central repository if one is utilized. 3. May an auditor conduct an engagement to report on whether a previously reported material weakness continues to exist if and, if so, what are the related requirements that the auditor must comply with? An auditor may report on whether a previously reported material weakness continues to exist at a company only if all of the following conditions are met: • Management accepts responsibility for the effectiveness of internal control over financial reporting; • Management evaluates the...

Words: 950 - Pages: 4

Premium Essay

Consob vs Pcaob

...differences in the structure of shareholding, with more family-owned businesses in Italy lowering the perceived importance of independence; (iii) traditionally less concern for independence as a governance characteristic in Italy. No countries within the EU, with the exception of Italy, currently have a system of mandatory audit firm rotation. In recent years, auditing of financial reports, i.e. the activity aimed at certifying “substantial reliability” of the financial statements, has been regulated both as a consequence of Europeans Union (EU) Directives, and as a consequence of domestic initiatives aimed at rebuilding public confidence in financial reports after the wellknown financial scandals. Furthermore, the reform of the Italian Company Act (Legislative Decree no.5 of 17 January 2003) requires that financial reports of all listed companies as well as limited liability companies (above a given size threshold) be audited by an independent auditor. It is required that the auditing be carried out by either an audit firm, by a Board of statutory auditors or by an individual auditor. According to art. 2409-bis of the Civil Code, the by-laws of unlisted companies which are not required to prepare consolidated financial reports can delegate the accounting audit to a Board of statutory auditors. As a consequence, under this regulation, it was required that the audit of private Italian companies’ financial reports be made by the Board of statutory auditors...

Words: 868 - Pages: 4

Free Essay

Pcaob - Name Lead Partner on Engagements

...PCAOB and its proposal to disclose the name of the lead audit partners in the report has facing mixed opinions from financial experts and public accounting firms. The proposal was suppose to be finalized in September of 2014 but is has been pushed back as everything else seems to be when dealing with high profitable companies (Big 4 in this case). As we further analyze this possible new rule, pros and cons arise and it is important to address we can see more pros if we looking at the investor’s point of view and cons if we put ourselves on the shoes of a public accounting firm. Let’s start by discussing the positive points of having the name of the lead partner on audit reports. First and foremost, that will be someone to be hold accountable for the reports. If a severe mistake is made, the partner in charge will have to explain the reason why this happened. Great news for investors right? Definitely. Now they will have someone to blame if they lose money. By holding partners accountable the audits can be highly improved. Not only the partner will take a closer look on what was done but will question them on how comfortable they are about putting their names on the audits. Therefore investors could rest assured of the quality and reliability of the reports. Another pro regarding this proposal is the transparency in which the accounting profession would be. In an industry where reputation is perhaps the most important asset of a company, being transparent and up front about...

Words: 671 - Pages: 3

Premium Essay

Access the Pcaob Website ( Www.Pcaob.Org) and List Two New or Proposed Auditing Standards Issued by the Pcaob.

...Access the PCAOB Website ( www.pcaob.org) and list two new or proposed auditing standards issued by the PCAOB. Auditing Standard no .18: Related Parties The Securities and Exchange Commission (SEC) approved a new Public Company Accounting Oversight Board (PCAOB) standard on auditing transactions with related parties and amendments to PCAOB standards on significant unusual transactions and a company’s transactions and financial relationships with its executive officers. The standard includes new requirements for evaluating how a company identifies, accounts for and discloses its transactions and relationships with related parties. The amendments also require auditors to perform procedures to (1) help them identify and evaluate the business purpose of the significant unusual transaction (2) Obtain understanding of a company’s financial relationship with its executive officers and also understanding their employment contracts. The PCAOB developed this standard and amendment to focus on the auditor’s areas that have been associated with risks and fraudulent financial reporting errors, the PCAOB hopes the new standard will increase the auditors like hood to identify material misstatement on financial statements. Auditing Standard (AS) No.18, Related Parties, will supersede an interim auditing standard and is effective for fiscal year beginning on or after December 15, 2014. The PCAOB noticed the existing standard provided example of procedures an auditor could perform but...

Words: 564 - Pages: 3

Free Essay

Practical Guide to the New Pcaob Reporting Requirements

...with PCAOB New Requirements The Sarbanes-Oxley Act of 2002 (SOX) requires that any accounting firm that prepares or issues an audit report with respect to a U.S. public company must register with the Public Company Accounting Oversight Board (PCAOB). Until recently, an accounting firm was required only to provide information current as of the initial registration date for the firm. Beginning on December 31, 2009, accounting firms were required to register with the PCAOB and file annual and current reports with the PCAOB. On August 13, 2009, the SEC approved the proposed rules with the original effective date of October 12, 2009, but on September 30, 2009, the PCAOB delayed the effective date to December 31, 2009. These parts implement the requirements of SOX section 102(d) that registered public accounting firms 1) report annual information about the firms and their audit practices, and 2) submit, as specified by the PCAOB or the SEC, more frequent information necessary to update the information previously filed with the PCAOB. Until now, the PCAOB had no requirement for annual reports or amendments to report material changes in initial registration information. The purposes of the new sections are 1) to keep the PCAOB up to date on a firm's basic professional information, such as name, location, licenses, and contact information; 2) to provide the PCAOB with current information regarding a firm's audit practice in order to facilitate analysis and inspection by the PCAOB and keep...

Words: 1337 - Pages: 6

Premium Essay

Disclosure of the Engagement Partner in the Audit Report an International Perspective on the Pcaob Proposal

...A C C O U N T I N G & A U standards setting D I T I N G Disclosure of the Engagement Partner in the Audit Report An International Perspective on the PCAOB Proposal By Jason Bergner and Ling Lin n December 4, 2013, the PCAOB conducted an open meeting to reconsider its proposal to require the disclosure of the engagement partner (and certain other participants) in the audit report, as part of its efforts to improve transparency. The PCAOB is carefully considering the likely costs and benefits of this requirement before making a final decision (http://pcaobus.org/News/Speech/Pages/120 42013_Harris_Transparency.aspx). The authors present arguments for and against requiring audit partner disclosure and summarize the current practice and empirical findings in foreign jurisdictions, such as the EU and China. While the debate for the past five years has been an argument about the possible costs and benefits of a signature or disclosure requirement, the authors believe that the movement of the international community toward adopting common standards may eventually warrant a similar U.S. approach. O Debating the Issue The signature/disclosure requirement has been an issue for almost a decade, first appearing on the PCAOB’s agenda in 2005 (Tammy Whitehouse, “Divided PCAOB Presses for Names in Audit Report,” December 4, 2013, Compliance Week, http://www.complianceweek.com/dividedpcaob-presses-for-names-in-audit-report/article/323604/). The current proposal to disclose...

Words: 2735 - Pages: 11