2018 PCAOB Budget Cuts Spending by 3.2 Percent
On November 16, the PCAOB unanimously approved its 2018 budget of $259.9 million, an $8.6 million reduction from the 2017 budget of $268.5 million. The SEC must approve all important matters from the PCAOB, and this 3.2% decrease comes after at least one SEC official criticized the board for its spending increases in prior years. The pressure to restrain spending has intensified because its core activities of inspecting audit firms, enforcing rules, and setting audit standards have largely remained at the same level. In December 2016, SEC Commissioner Michael Piwowar voted against the board’s budget for the second year in a row; the 2017 budget was a 4.2% increase from 2016, and Piwowar believed there was no justification for the growth. While then–SEC Chair Mary Jo White supported the budget, she also said the board should look for savings and efficiencies for 2018. “The 2018 budget also reflects a 12% decrease in the PCAOB’s accounting support fee,” PCAOB Chairman Doty said. “This is in part due to savings achieved this year.”
Enhancing Audit Quality Initiative Stresses Importance of Peer Reviews, Documentation
The AICPA has released the latest report for its Enhancing Audit Quality (EAQ) initiative, finding continued progress due to improvements to peer reviews and the use of audit documentation. An awareness campaign launched by the AICPA in 2017 was credited for gains in audit documentation, and the AICPA’s update to the CPA exam was credited for improvements with the guidance for professional skepticism and judgment.
Other Comprehensive Income” May Get New Name
Critics have long panned standards setters’—and companies’—use of “other comprehensive income” as a place to park undesirable results so as not to affect earnings. Some important information is placed in the category, however, and the IASB wants to highlight the information by giving the category a new name. On November 14, eight of the board’s 14 members agreed to the change, reasoning that items within OCI are hard to understand and the label does not help analysts and investors make decisions. “It’s not that investors are looking at it and saying, ‘Oh, this is not relevant to my valuation.’ It’s, firstly, they don’t even know it’s there,” IASB senior technical manager Michelle Fisher said. “Secondly, even if they do know it’s there, a lot of investors don’t look at it at all. And maybe they’re right in ignoring the OCI effects, but frankly they don’t know because they don’t actually go out and look at it.”