PCAOB Proposes Broker-Dealer Audit Standards

The Public Company Accounting Oversight Board has proposed new rules that would require external auditors to consider the risk profiles of their broker-dealer clients when performing audits. Two attestation standards relate to compliance reports and exemption reports, while another relates to auditing supplemental information along with financial statements. The latter would supersede AU Section 551. The proposals are open for public comment through September 12, 2011.

PCAOB Proposes Changes to Auditor’s Reporting Model

The Public Company Accounting Oversight Board addressed the need to increase transparency in public company audits by publishing a concept release. Scheduled for discussion in Q3 2011, the concept release discusses changes to the auditor’s reporting model, including expanding from a pass/fail model to a more robust report that incorporates analysis and audit assurance on information outside the financial statements. According to PCAOB member Daniel Goelzer, “Under some ideas floated in the concept release, auditors would be required to provide commentary on such matters as management’s judgments and estimates and its selection of accounting policies and practices.” The PCAOB is accepting public comment through September 30, 2011.

SEC and PCAOB Crack Down on Pricewaterhouse India

MoneyControl reports that the Securities and Exchange Commission and the Public Company Accounting Oversight Board have imposed record-breaking fines and sanctions on five Pricewaterhouse India firms. After investigating the Satyam fraud scandal, regulators determined that auditors violated PCAOB rules and standards. As a result PW India has been fined $6 million by the SEC and $1.5 million by the PCAOB. Moreover, PW India is prohibited from accepting new U.S.-based clients for six months.



Auditors Escape DFA, But Come Under PCAOB Scrutiny

The New York Times reports that, unlike the Sarbanes-Oxley Act of 2002, which created the Public Company Accounting Oversight Board to oversee the work of external auditors, the Dodd-Frank Act took a hands-off approach to auditors. Nevertheless, the new PCAOB Chairman, James Doty, recently blasted auditors for failing to do the work to support their opinions for audits conducted for firms that played an integral role in the financial crisis. Doty also said that, during the 2010 audit cycle, PCAOB inspectors have identified significant problems with valuations. Some board officials believe that the secrecy associated with PCAOB investigations and disciplinary actions bodes ill for the integrity of the profession. Although the PCAOB has asked Congress to amend the law, but no action is forthcoming.



PCAOB to Change Auditor Reports

Accounting Today reports that, this summer, the Public Company Accounting Oversight Board is scheduled to propose changes to the auditor’s reporting model. The action is a result of garnering input from stakeholders ranging from investors to audit committee members. PCAOB Chief Auditor Martin Baumann said, “…Investors say they need to hear more from the auditor about the risks the auditors faced in the audit and about the judgments and estimates management used in the financial statements.”