| 6/04/08 -- PCAOB Schedules Meeting to Consider Rules on Reporting
by Audit Firms.
The Public Company Accounting Oversight Board (PCAOB) has scheduled a
special meeting for June 10, 2008, to consider rules requiring annual
and special reporting of specified information by registered public accounting
firms.
If approved, the information provided in the reports would be available
to the public, except for confidential information. The PCAOB said that
any rules it adopts as a result of its deliberations on this topic would
form the foundation of its reporting regime for accounting firms.
The Board also will consider adopting rules on firm registration status
in the event of a merger or change in legal form.
In 2006, the PCAOB proposed rules on reporting and succession. The reporting
proposal would require all registered firms to report certain information
annually and to report other information if and when certain events occur.
The proposal on audit firm succession requires auditors to provide certain
information and representations as a condition to succeeding to the registration
status of a predecessor.
5/29/08 -- Next Meeting of Treasury Department’s Advisory Panel
Will Review Draft Report and Audit Quality Proposal.
The Treasury Department’s Advisory Committee on the Auditing Profession
is approaching the final stretch of its one-year life span as it prepares
for a June 3, 2008, meeting where it will review a draft of the final
report it will submit to Treasury Secretary Henry Paulson in July.
The meeting's agenda also includes oral testimony from witnesses and
consideration of written comments on the draft report. Treasury has asked
that comments be submitted by June 13.
The draft, which was discussed during the committee’s May 5 meeting,
addresses several human resources issues, including partner rotation,
retention, and compensation, as well as the more complex issues for firms
such as raising outside capital, litigation, and liability.
One recommendation asks the Public Company Accounting and Oversight Board
(PCAOB), in consultation with auditors, investors, public companies, and
others to "determine the feasibility of developing key indicators
of audit quality and effectiveness and requiring auditing firms to publicly
disclose these indicators."
The draft report says that given the dearth of publicly available information
on audit quality, requiring firms to disclose indicators would have other
positive effects, including improved decision-making by audit committees
in approving auditor selection.
2/28/2008 -- PCAOB Issues Proposed Standard on Engagement Quality
Review.
The Public Company Accounting Oversight Board unanimously approved issuing
for public comment Auditing Standard No. 7 (AS 7), Proposed Auditing
Standard on Engagement Quality Review (PCAOB Release No. 2008-002),
at an open board meeting on February 26, 2008, in Washington, D.C.
The proposed standard was published on the PCAOB's website, and the public
comment period will be 75 days ending on May 12, 2008.
The proposal takes a risk-based approach to engagement quality reviews
and was developed with similar existing international standards in mind.
Section 103 of the Sarbanes-Oxley Act of 2002 directs the Board to include
in its auditing standards a requirement that each registered public accounting
firm provide a concurring or second partner review and approval of each
audit report and concurring approval in its issuance. Since April 2003,
PCAOB Rule 3400T on interim quality control standards required a registered
public accounting firm to comply with the AICPA's Auditing Standard Board's
Statements on Quality Control Standards, QC 20-40 (AICPA 2002), and the
AICPA SEC Practice Section's Requirement for Membership Section 1000.08(f).
The proposal, if adopted, builds on the interim standard and includes
four main changes:
- A more explicit standard for risk assessment;
- A requirement for the reviewer to approve the issuance of the audit
report;
- A requirement for the issuer of the audit report to not proceed if
they know or should know that the report is inappropriate; and
- More detailed documentation for the concurrent review.
2/19/08 -- PCAOB Standing Advisory Group to Discuss the Use of Professional
Judgment.
The Public Company Accounting Oversight Board's Standing Advisory Group
released an agenda to its first open meeting of 2008, scheduled for Wednesday,
February 27, in Washington, D.C.
The meeting will include a panel discussion on the use of professional
judgment, based on the proposed framework for judgments developed by the
Securities and Exchange Commission's (SEC) Advisory Committee on Improvements
to Financial Reporting (CIFR), which were included in the panel's interim
progress report.
The SAG will also hold discussions on (a) the supervision of audit work
performed by registered public accounting firms, and (b) quality control
practices of global audit networks in audits of financial statements,
including financial statements prepared in accordance with International
Financial Reporting Standards (IFRS).
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