- The PCAOB’s staff is continuing to research whether the board’s standard on going concern evaluations needs to be revised to accommodate the accounting changes from the FASB that now require company managements to assess their business’s financial viability. The audit regulator and the accounting board employ standards that use different thresholds that compel disclosure, and the PCAOB is not sure if it should try to align its guidance with the FASB’s.
- The PCAOB proposed strengthening the requirements for auditors when they use the work of specialists in an audit. As the use of estimates has become more prevalent in financial reporting, the reliance upon valuation specialists has also grown, and PCAOB inspectors have uncovered an unevenness in the work auditors do when examining specialists’ work.
- The PCAOB is proposing an expansion of auditors’ responsibilities for examining clients’ use of accounting estimates. The board said additional guidance is necessary because there has been a proliferation of complex accounting estimates in financial statements in the past several years, and auditors have had difficulty checking them.
- The PCAOB unanimously adopted a rule to expand the auditor’s report in regulatory filings and make it more useful for investors. The final rule retains the current pass-fail model, but auditors will be required to discuss the critical audit matters (CAMs), or issues that were challenging as they examined a client’s financial statements, in their reports.
- The AICPA said the Audit and Accounting Guide (AAG) AAG: Reporting on an Entity’s Cybersecurity Risk Management Program and Controls (aag-cyb) provides a framework for managing cybersecurity risks. The guide explains how to implement the framework and report on an organization’s program for managing technology risks on a company-wide basis.