Audit Committee Brief

June 2017 issue

Audit Committee Brief is Deloitte's publication for audit committee members, providing recommendations, overviews of corporate governance resources, regulatory and legislative environment outlooks and technical updates.

PCAOB adopts changes to the auditor’s report

This Heads Up provides an overview of the PCAOB’s new auditing standard on the auditor’s report. While retaining the current “pass/fail” opinion of the existing auditor’s report, the new standard includes several significant modifications that are intended to increase the informational value, usefulness, and relevance of the auditor’s report. The key changes to the auditor’s report under the standard are:

  • Standardized ordering and inclusion of section headers, with the opinion section appearing first.
  • Enhanced descriptions of the auditor's role and responsibilities, including a statement regarding independence requirements.
  • Communication of critical audit matters (CAMs).
  • Disclosure of auditor tenure – The year in which the auditor began serving consecutively as the company’s auditor.
Audit Committee Brief - June 2017

CAQ report explores key role for CPAs in addressing cybersecurity risk

A report from the Center for Audit Quality outlines how the auditing profession can help companies and the capital markets address the challenges of cybersecurity, and provides perspective on the new AICPA framework. The report highlights the attributes audit firms can bring to addressing cybersecurity challenges, including adherence to core values of independence, objectivity, and skepticism; experience with independent evaluations; and multidisciplinary strengths.

Bricker discusses role of audit committees, auditors, and regulators in providing credible reporting

SEC’s chief accountant Wesley Bricker noted that a high-quality financial reporting process starts with companies and their audit committees. In a recent speech, Bricker highlighted issues his staff is addressing to enhance the investors’ trust in financial reporting, and discussed the critical roles that auditors and audit regulation play in maintaining the public’s trust in the audit profession while at the same time fostering innovation.

As sustainability takes root, finance takes notice

Proponents of sustainability — which include investors, consumers, regulators, and nongovernmental organizations — are looking to companies to consider the affect their operations and decisions are having on the environment and society. This issue of CFO Insights explores emerging standards that simplify sustainability reporting, and provides companies with insights that can improve performance.

Culture and conduct risk: Elevating internal audit’s role

Traditionally, internal audit has focused on providing assurance with respect to known risks and the effectiveness of controls in mitigating those risks. Regulators, however, are increasingly interested in an organization’s ability to identify vulnerabilities that may undermine the integrity of the risk management environment, including the risk of misconduct. Internal audit functions can play a pivotal role by substantively testing culture and identifying potential risk-related outliers that may not be visible via other means.

PCAOB issues proposals to enhance and strengthen requirements for auditing accounting estimates, including fair value, and to address the auditor’s use of the work of specialists

This Audit & Assurance Update addresses the key provisions of the PCAOB’s June 1, 2017, proposals for changes to its performance standards on auditing accounting estimates, including fair value measurements, and the auditor’s use of the work of specialists.  

Implementing the new revenue standard — how do your disclosures stack up?

This Heads Up discusses observations from Deloitte’s review of SAB 74 disclosures that Fortune 1000 companies included in periodic SEC filings regarding their adoption of the FASB’s new revenue standard. The companies have disclosed varied amount of qualitative and quantitative information, with most registrants expanding qualitative discussions of implementation efforts and few quantifying the impact of adoption.

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