Update on the current board issues: January 2014

Audit committee issues


CAQ alert for 2013 audit cycle

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The Center for Audit Quality (CAQ) published a member alert that identifies and addresses some of the more complex 2013 auditing areas, including those being followed by regulators.

The alert, Select Auditing Considerations for the 2013 Audit Cycle, covers the following areas:

  • Internal Control Over Financial Reporting (ICFR)
  • Professional Skepticism
  • Engagement Quality Review
  • Accounting Estimates, Including Fair Value Measurements
  • Substantive Analytical Procedures
  • Inaccurate or Omitted Disclosures

“This new alert is another example of how the public company auditing profession is proactively identifying emerging trends and responding to specific regulator concerns,” said CAQ Executive Director Cindy Fornelli. “By summarizing potential areas of risk, we believe this resource will be a valuable tool for CAQ member firms as they head into the 2013 audit cycle.”


SEC releases its 2014 examination priorities

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Corporate governance, conflicts of interest, enterprise risk management, and fraud detection and prevention at financial institutions are among the top areas of concern for the SEC’s National Examination Program (NEP) in 2014 (Examination Priorities for 2014).

The NEP staff said it will continue meeting with senior management and public boards to discuss how companies identify and mitigate conflicts of interest and legal, compliance, financial, and operational risks. It also plans to evaluate companies’ tone at the top.

With respect to fraud detection and prevention, the NEP plans to use its quantitative and qualitative tools to identify market participants engaged in fraudulent or unethical behavior.

“We are publishing these priorities to highlight areas that we perceive to have heightened risk,” said Andrew J. Bowden, Director of the SEC’s Office of Compliance Inspections and Examinations. “This document, along with our Risk Alerts and other public statements, help us to increase transparency, strengthen compliance, and inform the public and the financial services industry about key risks that we are monitoring and examining.”