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Audit committee issues

SEC goes forward with new audit communications standard

In late December 2012, the SEC approved the Public Company Accounting Oversight Board (PCAOB) standard on auditor communication with the audit committee.

The guidance is intended to help both auditors and audit committees better carry out their responsibilities by encouraging constructive dialogue on significant audit and financial statement matters.

The new guidance is effective for audits of fiscal periods beginning on or after December 15, 2012.

The new standard requires auditors to communicate about:

• Certain matters regarding the company's accounting policies, practices and estimates including, but not limited to, a description of processes and assumptions management used in critical estimates;
• The auditor's evaluation of the quality of the company's financial reporting;
• Information related to significant unusual transactions including the business rationale for such transactions; and
• The auditor's views regarding significant accounting or auditing matters when the auditor is aware that management consulted with other accountants about such matters and the auditor has identified a concern regarding these matters.

The SEC determined that the standard will apply to audits of "emerging growth companies" under the Jumpstart Our Business Startups Act of 2012. The approval does not include audits of brokers and dealers as the SEC has not yet approved the PCAOB auditing standards for audits of such entities.

For more information on the standard, read PwC’s December 20 Flashline.

Obama nominates White as next SEC chair

On January 24, 2013, President Obama nominated Mary Jo White to serve as the next SEC chair. Once confirmed, White would replace current SEC Chairman, Elisse Walter, who has been in place since Mary Schapiro stepped down in December.

White is a former US Attorney who specialized in investigating and prosecuting white collar crimes, securities and financial institution fraud, and other crimes in the Southern District of New York. Since leaving her post as a US Attorney in 2002, she’s been a partner at the law firm of Debevoise & Plimpton LLP leading its litigation practice.