Recent Regulatory Efforts – What is the Nexus to Audit Quality? Panelists: Denny Beresford,...
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Transcript of Recent Regulatory Efforts – What is the Nexus to Audit Quality? Panelists: Denny Beresford,...
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Recent Regulatory Efforts – What is the Nexus to Audit Quality?
Panelists: Denny Beresford, University of Georgia
Bill Platt, Deloitte LLP
Moderator: Cindy Fornelli, Center for Audit Quality
AAA Auditing Section Mid-Year MeetingJanuary 13, 2012
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Auditor-Audit Committee Communications• PCAOB issued reproposed standard Dec. 20; comments due Feb. 29 • Seeks to enhance relevance and quality of communications
between auditor and AC• New requirement that auditor communicate to AC any significant
unusual transactions• Reproposal reflects PCAOB’s oversight of Broker-Dealers,
implementation of new risk assessment standards• Requirement in original proposal that auditors evaluate two-way
communications process deleted• Requirements concerning auditor communications regarding
management’s CAE streamlined
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Mandatory Firm Rotation• All in process share common goal of increasing audit quality, of
which skepticism and objectivity are key components• Further, MFR would undermine the authority and responsibilities
of audit committee• No studies suggest a negative correlation between audit quality
and long-tenured engagements• Majority of comment letters received were critical of MFR as a
solution• CAQ, NACD and others are developing constructive ideas to
increase objectivity and skepticism• PCAOB Roundtables beginning in March
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Auditor’s Reporting Model• PCAOB will issue proposed standard in Q2 2012• CAQ comment letter on concept release included
proposals for consideration:– Auditor association with Critical Accounting Estimates
disclosure in MD&A– Use of expanded emphasis paragraphs in the audit report– Addition of clarifying language to standard audit report
• One approach raised by the PCAOB – an Auditor’s Discussion & Analysis – is problematic
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Implications for the Future?Other proposals – PCAOB Engagement Partner Identification proposal, European Commission legislation• If all that we’ve discussed today is enacted, what are the
implications for the profession? • What are the implications for the academic community?• What will the impact be on the pipeline?• Do new regulatory proposals present opportunities for
research?
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Implications for the Future?
To view the video, please click the link below:
http://www.CAQforinvestors.org/
The System of Investor Protection