PCAOB to audit committees—are you listening?
It's going to be another big year for audit inspections. Everyone from public and private companies to the FIFA organization is under fire for internal control and audit practices. Audit committees, are you ready?
The Public Company Accounting Oversight Board (PCAOB) recently released Audit Committee Dialogue, which provides insights on inspections that may help audit committee members with oversight of their auditors and questions audit committees should be asking of their auditors. This dialogue explores two key areas: recurring areas of concern and new risks the PCAOB is monitoring.
Key recurring areas of concern
Since the PCAOB began inspections of member firms, it has found a few recurring ares of concern, which include:
- Auditing internal control over financial reporting
- Assessing and responding to risks of material misstatement
- Auditing estimates, including fair value measurements and disclosures
- Referred work in cross-border audits
Emerging risks are a top priority
In addition to tips on recurring risks, the PCAOB provides insight on the newest, emerging risk areas—an area of heightened focus for the organization. These potential areas of emerging risk are:
- Increases in activity for mergers and acquisitions
- Falling oil prices
- Undistributed foreign earnings
- How to maintain audit quality while growing other lines of business
So, what does this mean for you?
If any of the above risks described are directly relevant to your organization, understand that more time will be spent on your process and a PCAOB inspection of your organization might be right around the corner. Here are some additional questions you should be asking in your company:
- How much visibility does your audit committee have into your control environment?
- Are you being proactive toward your auditor, new standards, and regulations?
- Do you have a process in place and the tools necessary to prepare yourself against these additional audit standards?
Read the full report from the PCAOB to find out more, and get questions you should be asking your auditors.