Recent Guidance from the Pcaob

This chapter highlights recent activities at the Public Company Accounting Oversight Board (PCAOB) because some of the issues being addressed by this group may have an impact on the broader audit profession, which involves the audits of closely-held companies and standards issued by the AICPA's Auditing Standards Board (ASB). The exposure draft included a proposed new auditing standard for situations in which the auditor divides responsibility for the audit with another accounting firm. The proposed amendments would expand guidance that governs the planning and supervision of audits involving other auditors. The re-proposed standard also requires the auditor to determine whether there are any critical audit matters in the audit of the current period's financial statements. The re-proposed new standard states that the auditor must communicate in the auditor's report critical audit matters statements or state that the auditor determined that there are no critical audit matters. The lead auditor would obtain representation from the referred-to auditor that the referred-to auditor is duly licensed to practice under the laws of the jurisdiction that apply to the work of the referred-to auditor. PCAOB inspections involving the work of other auditors as well as both the lead auditor and the other auditors have found deficiencies. In some cases, deficiencies such as noncomplex with the lead auditor's instructions or the failure to communicate significant audit and accounting issues to the lead auditor have been identified.