PCAOB Staff Requests Information and Comment on Application and Use of the PCAOB’s Interim Attestation Standards

Oct 07, 2022

In September 2022, the Public Company Accounting Oversight Board (PCAOB) issued a staff request for information and comment on matters related to the application and use of the Board’s interim attestation standards. Input from the public will help inform any potential recommendation the staff may make to the Board regarding updates to the interim attestation standards. Comments are requested by October 26, 2022.

Modernizing standards is one of the four key goals the Board identified in its draft strategic plan. To meet that goal, earlier this year, the Board announced one of the most ambitious standard-setting agendas in PCAOB history, including plans to modernize interim standards that have not been updated since they were initially adopted decades ago.

Registered public accounting firms are sometimes engaged to examine and report on matters outside of an audit of financial statements. PCAOB attestation standards apply to attest engagements, which generally involve issuing a report on subject matter, or an assertion about subject matter, that is the responsibility of another party. For example, attest engagements may concern a company’s compliance with laws and regulations, or a company’s historical data or measures that are evaluated against certain criteria.

In April 2003, the Board adopted on an interim basis certain attestation standards from the American Institute of Certified Public Accountants. These standards have continued in effect substantially as they were adopted.

Review the press release and request for information on the PCAOB's website.

CPAB publishes planned changes to information disclosure

Oct 04, 2022

On October 4, 2022, the Canadian Public Accountability Board (CPAB) published its disclosure recommendations document, outlining planned changes to how they will disclose information about the results of their regulatory assessments. Their recommendations include both near-term changes to be implemented in 2023 and longer-term modifications which require changes to legislation or to our rules.

Based on a comprehensive consultation process and a review of approaches in other jurisdictions, the changes outlined in the document are driven by a desire to provide more information and align with disclosure approaches in similar jurisdictions while respecting Canada’s unique regulatory environment.

Given continued high levels of inspection findings, and changes in audit and regulatory practices and stakeholder expectations, it is appropriate to evolve our current disclosures approach. This evolution is consistent with CPAB’s role as Canada’s public company audit firm regulator charged with protecting the investing public’s interests.

CPAB's recommendations include both near-term changes to be implemented in 2023 and longer-term modifications which require changes to legislation or to our rules. These longer-term changes are expected to take a minimum of two to three years because changes to CPAB’s Rules and its governing legislation require the involvement of provincial governments and securities regulators.

In the near-term, beginning in 2023, CPAB, where possible, will disclose:

  • Significant enforcement actions imposed on a firm following an inspection
  • Recommendations which were included in a firm report but not addressed by the firm

Over the longer term, CPAB will work to secure rule or legislative changes which will allow the following:

  • Mandatory disclosure of issuer-specific significant inspection findings to that issuer’s audit committee
  • Individual public inspection reports for each audit firm

Review the recommendations on the CPAB's website.

Audits of Less Complex Entities – Progress Toward a Solution

Sep 13, 2022

On September 13, 2022, the Auditing and Assurance Standards Board (AASB) provided an update on its progress to finding a solution for practitioners in applying Canadian Auditing Standards to audits of less complex entities.

This update includes:

  • overview of Discussion Paper respondents;
  • what you told us;
  • what we are doing now; and
  • what assistance is available now

Review the report on the AASB's website.

PCAOB Issues Publication on Inspections of Audit Firms

Aug 31, 2022

August 31, 2022, the Public Company Accounting Oversight Board (PCAOB) issued "Spotlight: Observations From the Target Team’s 2021 Inspections", which details the results of audit firm inspections conducted by the Board’s Division of Registration and Inspections (the “Division”) in 2021.

Specifically, the publication discusses the Division’s observations, as well as the auditor’s responsibilities and good practices, related to four key topics: (1) fraud, (2) interim reviews of special-purpose acquisition companies (SPACs) and de-SPACs, (3) going concern, and (4) cash and cash equivalents.

Review the publication on the PCAOB's website.

PCAOB Signs Agreement with Chinese Authorities, Taking First Step Toward Complete Access for the PCAOB to Select, Inspect and Investigate in China

Aug 26, 2022

On August 26, 2022, the Public Company Accounting Oversight Board (PCAOB) released a statement about it having signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China, which is the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law.

The agreement grants the PCAOB complete access to the audit work papers, audit personnel, and other information its needs to inspect and investigate any firm it chooses, with no loopholes and no exceptions.

The PCAOB Is currently finalizing preparations to be on the ground by mid-September so it can put this agreement to the test.

The Statement of Protocol specifically grants the PCAOB complete access in three important ways:

  • The PCAOB has sole discretion to select the firms, audit engagements and potential violations it inspects and investigates – without consultation with, nor input from, Chinese authorities;
  • Procedures are in place for PCAOB inspectors and investigators to view complete audit work papers with all information included and for the PCAOB to retain information as needed; and
  • The PCAOB has direct access to interview and take testimony from all personnel associated with the audits the PCAOB inspects or investigates.

Re­view the press release on the PCAOB’s web­site.

PCAOB Releases Resource for Audit Committees

Aug 26, 2022

In August 2022, the Pub­lic Com­pany Ac­count­ing Over­sight Board (PCAOB) has issued “Spotlight — Audit Committee Resource (August 2022)”, which primarily consists of questions that public-company audit committees may wish to consider as part of their ongoing engagement and discussion with their auditors, including how the auditors are responding to the financial reporting and audit risks posed by the current economic environment.

Topics covered in the publication include:

  • fraud and other risks;
  • initial public offerings and mergers and acquisitions;
  • audit execution;
  • audit firms’ quality control systems;
  • compliance with auditor independence requirements; and
  • technology (e.g., auditing digital assets, responding to cyberthreats, and use of data and technology in the audit).

Re­view the publication on the PCAOB's web­site.

CPAB Express – Existence of crypto-assets held by third parties

Aug 19, 2022

On August 19, 2022, the Cana­dian Pub­lic Ac­count­abil­ity Board (CPAB) re­leased a bulletin that high­lights their concerns about the quality of evidence that some auditors are obtaining when auditing the existence of crypto-assets held in custody by third parties.

The bulletin describes things that CPAB believes auditors should be considering when auditing the financial statements of reporting issuers that use custodians to safeguard their crypto-assets.

Re­view the bulleting on the CPAB’s web­site.

SEC Approves the PCAOB’s Updated Standard on Requirements Related to the Lead Auditor’s Use of Other Auditors

Aug 15, 2022

On August 12, 2022, the Securities Exchange Commission (the SEC) approved the Public Company Accounting Oversight Board’s (PCAOB) updated standards for audits that involve multiple auditing firms. The amended standards strengthen the requirements for lead auditors who supervise other auditors in an audit, helping to enhance audit quality and protect investors.

The PCAOB’s updated standards make enhancements across two broad areas. First, the amended standards specify certain procedures for lead auditors to perform when supervising other auditors. Second, they require lead auditors to prioritize their supervisory activities around higher-risk areas in the audit.

Re­view the SEC’s press re­lease  on the SEC’s website and the PCAOB’s Release No. 2022-002Planning and Supervision of Audits Involving Other Auditors and Dividing Responsibility for the Audit With Another Accounting Firm, on the PCAOB's web­site.

AASB Exposure Draft issued: Amendments to the CASs with respect to the IESBA’s Revised Definitions of Listed Entities and PIEs

Aug 09, 2022

On August 9, 2022, the Auditing and Assurance Standards Board (AASB) issued an Exposure Draft of “Proposed Narrow-scope Amendments to CAS 700, Forming and Opinion and Reporting on Financial Statements, and CAS 260, Communication with Those Charged with Governance, as a Result of the Revisions to the IESBA Code that Require a Firm to Publicly Disclose When a Firm Has Applied the Independence Requirements for Public Interest Entities”. Comments to the AASB must be received by September 16, 2022.

The Exposure Draft is similar to the one of the same name issued by the IAASB on July 6, 2022 relating to changes to the ISAs for which comments are due by October 4, 2022.

Re­view the press re­lease and Exposure Draft on the AASB's web­site.

IAASB: Quality Management Implementation Resources available

Aug 02, 2022

The IAASB has issued several resources to assist practitioners in the first-time implementation of its new and revised quality management standards. These include guides for ISQM 1, ISQM 2 and ISA 220 (Revised), and a definition of an engagement team fact sheet.

Refer to the IAASB’s focus area web page for these and other resources.

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