The Public Company Accounting Oversight Board (PCAOB) reproposed for public comment an auditing standard, Related Parties, and related amendments to other standards to address areas that have been contributing factors in a number of financial reporting frauds. The reproposed standard and amendments include revisions in response to comment letters sent to the PCAOB on its February 28, 2012 proposal.
The reproposed standard would increase the independent auditor's focus on the evaluation of a company's identification of, accounting for, and disclosure of its relationships and transactions with related parties.
The reproposed amendments would enhance the auditor's identification and evaluation of a company's significant unusual transactions. They also would require that the auditor perform procedures, as part of the process to assess the risk of material misstatement in the financial statements, to obtain an understanding of a company's financial relationships and transactions with executive officers.
The revisions include clarifying the relationship of the reproposed standard with the Board's risk assessment standards.
Comments on the reproposed standard and related amendments are due by July 8, 2013.
For more information on the original proposed standard and other amendments, directors may want to read our coverage in the Spring 2012 BoardroomDirect.
The Private Company Council (PCC) earlier this month voted to move forward with proposed alternatives within U.S. GAAP designed to improve financial reporting for private companies. This followed a decision the PCC and the FASB made last month to seek public comment on private company decision-making framework.
In its third public meeting on May 7, the PCC made tentative decisions in the following areas:
Regarding the private company decision-making framework, the FASB and PCC on April 15 issued an invitation to comment. The framework contains guidance for both bodies to determine when and how to modify US GAAP for private companies. The comment deadline for the proposed framework is June 21.
For more information on these FASB and PCC actions, directors may want to read the following PwC publications: