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Update on the current board issues: August 2014

Audit committee issues

 

PCAOB issues staff consultation paper on accounting estimates and fair value standard-setting

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On August 19, the Public Company Accounting Oversight Board issued for public comment a staff consultation paper on standard-setting activities related to auditing accounting estimates and fair value measurements.

The paper was prepared by its Office of the Chief Auditor as part of its efforts to seek input related to the potential need for changes to the PCAOB standards in this area, and a possible approach for a new auditing standard.

"The PCAOB and foreign audit regulators have identified compliance with auditing requirements related to fair value measurements as an area of continued concern, and I support the staff's outreach efforts in this important area," said PCAOB Chairman James R. Doty.

The PCAOB will hold a Standing Advisory Group meeting on October 2 in Washington, DC, to discuss matters related to auditing accounting estimates and fair value measurements.

Comments may be submitted by postal mail or e-mail, and should be sent to the Office of the Secretary, PCAOB, 1666 K Street NW, Washington, DC 20006, or to comments@pcaobus.org. All comments should refer to Staff Consultation Paper, Auditing Accounting Estimates and Fair Value Measurements, in the subject line, and should be received by the PCAOB no later than November 3. All comments will be made public.

[For more information on the PCAOB consultation paper, read PwC’s recent In brief.]

 

IIA proposes changes to internal audit practices framework

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On August 4, the Institute of Internal Auditors (IIA) released for public comment proposed changes to its International Professional Practices Framework amid heightened legislative, regulatory and market-driven demands on the internal audit profession.

The proposed changes include a new mission statement for the framework, 12 core principles for internal auditing, implementation and supplemental guidance, and the removal of position papers from the framework.

The proposed mission statement is: “To enhance and protect organizational value by providing stakeholders with risk-based, objective, and reliable assurance, advice and insight.”

The proposed core principles are that internal audit:

  1. Demonstrates uncompromised integrity
  2. Displays objectivity in mindset and approach
  3. Demonstrates commitment to competence
  4. Is appropriately positioned within the organization with sufficient organizational authority
  5. Aligns strategically with the aims and goals of the enterprise
  6. Has adequate resources to effectively address significant risks
  7. Demonstrates quality and continuous improvement
  8. Achieves efficiency and effectiveness in delivery
  9. Communicates effectively
  10. Provides reliable assurance to those charged with governance
  11. Is insightful, proactive, and future-focused
  12. Promotes positive change.

The framework includes all the authoritative standards and guidance promulgated by The IIA, the internal audit profession’s global standard-setting body. The framework is the blueprint for how the body of knowledge and guidance fit together to support the professional practice of internal auditing.

The deadline for responses to the proposed framework changes is November 3. If approved by The IIA Executive Committee and Global Board post exposure, elements of the new framework could be available in the first quarter of 2015. A more fully populated new framework could then be available sometime in 2016.