PCAOB Proposes New Framework for Reorganization of PCAOB Auditing Standards
The latest issue of Deloitte's Heads Up discusses the PCAOB's recently issued release that includes a proposed framework for the reorganization of PCAOB auditing standards. Under the proposed framework, PCAOB Auditing Standards 1-16 and PCAOB interim standards would be reorganized into a topical structure (based on the audit process) by using a four-digit sequential numbering scheme. Comments on the release are due by May 28, 2013.
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December 17, 2012: SEC Passes AS 16
AS 16 States That The Objectives of the Auditor are to:
- Communicate to the audit committee the responsibilities of the auditor in relation to the audit and establish an understanding of the terms of the audit engagement with the audit committee;
- Obtain information from the audit committee relevant to the audit;
- Communicate to the audit committee an overview of the overall audit strategy and timing of the audit; and
- Provide the audit committee with the timely observations arising from the audit that are significant to the financial reporting process.
For further information refer to the Heads Up on the proposed rule issued on September 18, 2012.
SEC Comment Letter, November 2012
Learn about Deloitte’s perspective on the topics the SEC staff focused on in its comment letters to registrants in 2012. Highlights below:
- Implementation of Dodd-Frank Act and JOBS Act continued to be a major focus for SEC in 2012
- SEC finalized rules affecting swaps and derivatives clearing, conflict minerals, and extractive issuer payments.
- SEC staff released FAQ about various topics related to JOBS Act.
- SEC staff issued final report on incorporation of IFRSs.
Key Responsibilities of the Audit Committee Include:
- Having an effective relationship with management, the internal auditors, and the independent auditor
- Taking a "risk-intelligent" governance approach
- Overseeing the establishment of appropriate controls and antifraud programs
- Overseeing dissemination of earnings press releases, financial information, and earnings guidance
- Monitoring a robust code of ethics
- Establishing a process for investigating allegations, especially those against senior management.
Audit Committee Composition Considerations
- Focus on committee composition, including independence, financial expertise, broad business or leadership perspective, industry knowledge, and succession planning.
- Consider rotating audit committee members periodically.
- Engage independent advisers to help evaluate the audit committee’s performance when necessary.