Heads Up on July PCAOB Standing Advisory Group meeting

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01 Sep 2010

Deloitte (United States) has published a new Heads Up Newsletter discussing the meeting of the PCAOB's Standing Advisory Group (SAG) held on 15 July 2010. The SAG discussed the following: broker-dealer audit considerations, FASB projects and their potential impact on auditors, and the auditor's consideration of subsequent events.

In addition, the PCAOB staff summarised comments it has received on its proposed audit committee communications standard and gave an update on its plans to undertake a project on the auditor's reporting model.

In relation to the impacts of the current IASB-FASB convergence process and the move to more 'principles-based' standards, the Heads Up notes the following:

There was considerable debate and discussion regarding the proposed timeline for the completion of current and upcoming FASB projects, with many voicing concerns about the potential for compromising quality in standards if the current timeline were to be strictly followed. In addition, many SAG members expressed concern about (1) resources and the ability to respond within compressed time frames and (2) capacity constraints that could cause diversions from financial reporting needs, potentially affecting the quality of financial reporting.

SAG members also discussed the increase in judgment that will be needed as a result of the FASB's move to more principles-based accounting standards. These same individuals encouraged the PCAOB and the SEC to implement the recommendation of the SEC's Advisory Committee on Improvements to Financial Reporting and develop a judgment framework for both issuers and auditors to help them arrive at well-reasoned judgments.

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