Update on the current board issues: August 2013

Audit committee issues


PCAOB proposes auditor reporting model and other information standards

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Nearly two weeks after the International Auditing and Assurance Standards Board (IAASB) released its proposed standards on auditor reporting, the US Public Company Accounting Oversight Board (PCAOB) released a proposed new auditing standard and related amendments designed to enhance the auditor’s reporting model.

The PCAOB’s proposed auditing standard, The Auditor's Report on an Audit of Financial Statements When the Auditor Expresses an Unqualified Opinion and related amendments would require the auditor to disclose additional information in the auditor’s report about the audit and the auditor. Among other matters, the proposed standard would require auditors to include in the audit report a discussion of critical audit matters specific to the audit. [For more information on this proposed standard, read PwC’s In brief: PCAOB proposes significant changes to the auditor’s report.]

The Board also proposed auditing standard, The Auditor’s Responsibilities Regarding Other Information in Certain Documents Containing Audited Financial Statements and the Related Auditor’s Report, and related amendments, which would require the auditor to perform additional procedures with respect to other information, and to communicate certain information in the auditor’s report. [For more information on this proposed standard, read PwC’s In brief: PCAOB proposes new auditing standard on other information.]

The PCAOB will accept comments on the proposed standards and related amendments through December 11, 2013. Both standards would be effective for audits of financial statements for fiscal years beginning on or after December 15, 2015, subject to SEC approval.

[For more about the IAASB standard, read BoardroomDirect July 2013 Audit committee issues in brief: Changes to auditor’s reporting model coming worldwide.]


PwC comments on SASB’s conceptual framework exposure draft

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PwC submitted a comment letter expressing support of the Sustainability Accounting Standards Board’s (SASB) exposure draft of its conceptual framework.

The SASB is a non-profit organization engaged in the creation and dissemination of sustainability accounting standards to be used by public companies.

PwC’s letter states: “We believe the SASB’s conceptual framework represents an important addition to the debate on the future of corporate reporting. Good corporate reporting is central to the effective functioning of the capital markets and we support voluntary initiatives that meaningfully contribute to this discussion. From our initial review, we believe that the SASB’s guidance will provide valuable insight to companies as they assess the materiality of information for inclusion in their corporate reporting.”

In the letter, PwC asks that the SASB:

  • ensure its efforts to align with financial reporting are consistent throughout the conceptual framework, particularly with regards to materiality,
  • ensure the conceptual framework provides a clear description of its standard-setting process, intended outputs, and key concepts, and
  • continue to evaluate and improve its standard-setting process.

FASB and IASB to form joint transition resource group for revenue recognition

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The FASB and IASB announced plans to create a joint transition resource group focused on the upcoming final converged standard on revenue recognition.

The group will be responsible for informing the IASB and the FASB about diversity in practice or interpretive issues that could arise when companies, institutions, and other organizations implement the revenue recognition standard. They will also provide information that will help the boards determine what, if any, action will be needed to resolve the issues. The resource group will convene following the final issuance of the revenue recognition standard later this year.