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PCAOB reports on risk-related deficiencies

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Contents
PCAOB reports on deficiencies in assessment of and response to risk
CAQ publishes alerts
GASB proposes changes to pension standards for certain governments
GAO launches Center for Audit Excellence
International Federation of Accountants
     Proposals issued on improvements to IPSASs
     Board proposes guidance on impairment of revalued assets
Comment letters issued



PCAOB reports on deficiencies in assessment of and response to risk

The PCAOB issued a report, “Inspection Observations Related to PCAOB ‘Risk Assessment’ Auditing Standards (No. 8 through No.15),” detailing the significant deficiencies identified in the implementation of, and compliance with, the Risk Assessment Standards in audits inspected during the 2012-2014 inspection cycles. The report reflects the Board’s concern over the number and significance of the deficiencies and includes information on the possible root causes of the deficiencies.



CAQ publishes alerts

The Center for Audit Quality (CAQ) published two new alerts, Select Auditing Considerations for the 2015 Audit Cycle and Select Considerations for the 2015 Audit Cycle for Brokers and Dealers. The alerts discuss some of the more complex and judgmental audit areas, including many of the areas discussed in two PCAOB Staff Inspection Briefs, “October 2015 PCAOB Staff Inspection Brief” and “Information about 2015 Inspections of Auditors of Brokers and Dealers,” as well as in the Board’s publication, “PCAOB Staff Guidance for Auditors of SEC-Registered Brokers and Dealers.”

Topics discussed in the alerts include

  • Professional skepticism
  • Internal control over financial reporting (ICFR)
  • Risk assessment and audit planning
  • Supervision of other auditors and multi-location audit engagements
  • Testing of issuer-prepared data and other reports
  • Cybersecurity
  • Revenue recognition
  • Auditing accounting estimates, including fair value measurements
  • Related parties and significant unusual transactions



GASB proposes changes to pension standards for certain governments

The GASB issued an Exposure Draft, Accounting and Financial Reporting for Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans – an amendment of GASB Statement No. 68, which addresses a practice issue regarding the scope and applicability of Statement 68, Accounting and Financial Reporting for Pensions. This issue relates to pensions provided through certain multiple-employer defined benefit pension plans and revolves around the inability of state or local governments to obtain measurement and data points for these plans to comply with Statement 68.

The proposed guidance would amend the scope and applicability of Statement 68 to exclude pensions provided to employees of state or local government employers through a cost-sharing, multiple-employer defined benefit pension plan that meets all of the following:

  • Is not a state or local government pension plan
  • Is used to provide defined benefit pensions to employees of employers that are not state or local government employers
  • Has no predominant state or local government employer, either individually or collectively with other state or local government employers that provide pensions through the pension plan

The proposed statement would establish requirements for the recognition and measurement of pension expense/expenditures and liabilities, note disclosures, and supplementary information required for pensions that have the characteristics described above.

Comments on the proposal are due by November 16.



GAO launched Center for Audit Excellence

The U.S. Government Accountability Office (GAO) launched the Center for Audit Excellence in an effort to cultivate effective accountability organizations, such as state and local auditors and audit offices in other countries, which will help improve government performance and transparency and the sound use of public funds. The center will provide fee-based customized training, technical assistance, and other products and services to domestic and international audit organizations.



International Federation of Accountants

Proposals issued on improvements to IPSASs

IFAC’s International Public Sector Accounting Standards Board (IPSASB) recently released Exposure Draft 58, Improvements to IPSASs 2015. This is the first IPSASB project to consider broader improvements to International Public Sector Accounting Standards (IPSASs) rather than focusing solely on those to maintain convergence with IFRS.

Exposure Draft 58 proposes general improvements to IPSASs, improvements to increase consistency with Government Finance Statistics reporting guidelines, and improvements to maintain convergence with IFRS. The guidance also proposes consequential amendments arising from the Conceptual Framework for General Purpose Financial Reporting by Public Sector Entities.

Comments on the Exposure Draft are due by January 15, 2016.

Board proposes guidance on impairment of revalued assets

The IPSASB released Exposure Draft 57, Impairment of Revalued Assets, which proposes to bring property, plant, and equipment, as well as intangible assets, on the revaluation model within the scope of IPSAS 21, Impairment of Non-Cash-Generating Assets, and IPSAS 26, Impairment of Cash-Generating Assets.

The proposal would provide users with relevant information on impairments to these assets. Additionally, the proposed guidance would clarify that an impairment to one or more individual assets within a class of property, plant, and equipment does not necessitate a revaluation of the entire class to which that impaired asset belongs.

Comments on the Exposure Draft are due by January 15, 2016.



Comment letters issued

On September 30, the firm issued a comment letter in response to the AICPA Auditing Standards Board’s proposed Statement on Auditing Standards, Amendment to Statement on Auditing Standards No. 122 Section 799, Forming an Opinion and Reporting on Financial Statements.

On October 14, the firm issued a comment letter in response to the FASB’s proposed ASU, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net).




© 2015 Grant Thornton LLP, U.S. member firm of Grant Thornton International Ltd. All rights reserved. This Grant Thornton LLP On the Horizon provides information and comments on current accounting and SEC reporting issues and developments. It is not a comprehensive analysis of the subject matter covered and is not intended to provide accounting or other advice or guidance with respect to the matters addressed in this publication. All relevant facts and circumstances, including the pertinent authoritative literature, need to be considered to arrive at conclusions that comply with matters addressed in this publication. For additional information on topics covered in this publication, contact a Grant Thornton client-service partner.