everything you always wanted to ask the pcaob · 14/05/2019 · the pcaob and the big four •how...
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Everything You Always Wanted to Ask the PCAOB
May 14, 2019
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Presenters
Joe HowellFounder, SOX & Internal Controls Professionals GroupVice President of Strategic InitiativesWorkiva
Jeanette FranzelFormer Board Member PCAOB
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1.Which of these best describes the organization you work for?
a.Private company
b.Public company
c.Government, academic, or not-for-profit
d.Retired or not currently employed
CPE Question #1
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The PCAOB and the Big Four
•How does the PCAOB interact with the Big Four?◦ PCAOB board and staff
◦ Firm leadership and engagement team
◦ PCAOB Standing Advisory Group
◦ Center for Audit Quality (Affiliated with the AICPA)
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Current Focus
•What are the current focus areas of the PCAOB?◦ Recurring audit deficiencies
◦ Economic risks
◦ Policy developments
◦ New accounting standards
◦ Information technology
◦ Audits involving other auditors outside of the United States
Sources of Information:
• Key PCAOB publication
• Inspection reports for your audit firm
• Proactive discussion with your audit partner and audit team
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1.Which of these best describes your principal role?
a.Financial reporting
b.Internal audit
c.Internal controls/SOX
d.Other
CPE Question #2
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Audit Process
•Is there any way to get in front of the impact these findings have on our audit processes?
◦ Assign a "champion" on your team responsible for tracking PCAOB
developments
◦ Leverage audit committee communication regarding PCAOB matters
◦ Build specific expectations for relevant discussions during the planning and
milestone meetings with the audit partner and team
◦ Step back, analyze, and push back if necessary
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Tips for Management
•Any guidance or best practices for management on how to read and react to the inspection reports, which are often pretty detailed and share common themes?
◦ Focus on your own firm's report first
◦ Identify areas of focus in the executive summary and trends from prior years
▪ Is the number of findings going up, staying the same, or going down?
▪ What are the most frequently identified audit deficiencies?
▪ Which accounting areas were impacted by the audit deficiencies?
▪ Which deficiencies in Part I might be relevant for your audit?
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The PCAOB and Practitioners
•Does the PCAOB ever meet with practitioners to see how their actions are impacting companies?
◦ High-level policy discussions
◦ Audit committee outreach
◦ Various outreach meetings with practitioners (mostly informal and
based on requests)
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Report Timing
•What drives the timing on when the PCAOB reports are released?
◦ For the Big Four, inspection fieldwork occurs after the Dec. 31 filing season
◦ Variables impacting timing for each firm include the number and nature of:
▪ Audits inspected and number of office visited
▪ Comment forms issued
▪ Potential audit deficiencies and related quality control issues
◦ Firms should have a handle on their inspection results in late summer/early fall
◦ Inspection reports are issued the following calendar year
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The PCAOB, SEC, and FASB
•How does the PCAOB interact with the SEC and the FASB?
◦ Regular, formal coordination meetings between PCAOB, SEC, and FASB
◦ Frequent, ongoing coordination between PCAOB and SEC
◦ As-needed coordination between PCAOB and FASB
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1.How do you handle your internal audit process?
a.Fully staffed internally
b.Outsource a relatively small portion
c.Outsource significant portions
d.Don't know or doesn't apply
CPE Question #3
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Practitioners
Tim BoganChief Risk Officer
Charleen AvenellDirector of Accounting
Lynn White-HenselSenior Manager
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1.What do you see as the top risk for your organization in 2018?
a.Cybersecurity
b.Geopolitical uncertainty
c.FCPA or bribery/corruption
d.Strategic: new products, new markets
e.None of the above
CPE Question #4
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Resources
PCAOB Communications:Building a Foundation for Audit Quality, Helen Munter, Director of PCAOB Division of Registration and Inspections, AICPA Conference on Current SEC and PCAOB Developments (Dec 2017)https://pcaobus.org/News/Speech/Pages/Munter-Building-A-Foundation-for-Audit-Quality.aspx
PCAOB Staff Inspection Brief: Information about 2017 Inspections (August 2017)https://pcaobus.org/Inspections/Documents/inspection-brief-2017-3-issuer-scope.pdf
PCAOB Staff Inspection Brief: Preview of Observations from 2016 Inspections of Auditors of Issuers (Nov 2017)https://pcaobus.org/Inspections/Documents/inspection-brief-2017-4-issuer-results.pdf
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Resources
PCAOB Audit Practice Alerts:
PCAOB Staff Audit Practice Alert No. 15, Matters Related to Auditing Revenue from Contracts
with Customers (Oct. 5, 2017)
https://pcaobus.org/Standards/QandA/SAPA-15-revenue-accounting-standard.pdf
PCAOB Staff Audit Practice Alert No. 12, Matters Related to Auditing Revenue in an Audit of
Financial Statements (Sept. 9, 2014)
https://pcaobus.org/Standards/QandA/9-9-14_SAPA_12.pdf
PCAOB Staff Audit Practice Alert No. 11, Considerations for Audits of Internal Control over
Financial Reporting (Oct. 24, 2013)
https://pcaobus.org/Standards/QandA/10-24-2013_SAPA_11.pdf