PCAOB Staff Audit Practice Alert No. 11 – Part 1
On October 24, 2013, the Public Company Accounting Oversight Board (PCAOB) issued a Staff Audit Practice Alert (Staff Alert) that highlights new, emerging, or otherwise noteworthy circumstances that may affect how auditors conduct audits under the existing standards and rules of the PCAOB and relevant laws. This blog provides an introduction to the key areas contained in this Staff Alert.
The Staff Alert was issued in light of significant auditing practice issues observed by the PCAOB staff in the past three years relating to audits of internal control over financial reporting. The Alert highlighted certain requirements of the auditing standards of the PCAOB in aspects of audits of internal control in which significant auditing deficiencies have been cited frequently in PCAOB Inspections reports. We’ll be issuing a series of blog posts related to this Alert over the next several weeks. Areas to be discussed include:
- Risk assessment and the audit of internal control
- Obtaining an understanding of internal controls
- Selecting controls to test
- Testing management review controls
- Information technology (“IT”) considerations, including system-generated data reports.
- Roll-forward of controls tested at an interim date
- Using the work of others
- Evaluating identified control deficiencies