AICPA Updates Interpretive Guidance for PCAOB’s Critical Audit Matters
On October 23, the AICPA said it has updated interpretive guidance related to the PCAOB’s new critical audit matters (CAM) requirement. The update adds Interpretation No. 5, “Communicating Critical Audit Matters When Reporting on Audits Conducted in Accordance With Auditing Standards Generally Accepted in the United States of America and the Standards of the PCAOB,” to AU-C section 700A, “Forming an Opinion and Reporting on Financial Statements.” The rule, which represents a major change to the brief pass-fail auditor reports that have been in place for decades, requires auditors to add a discussion of CAMs that arose during the audit. The PCAOB defines CAMs as issues that have been communicated to the audit committee, are related to accounts or disclosures that are material to the financial statements, and involved especially difficult judgment from the auditor. The PCAOB also changed other content and form of the auditor’s report. The standard became effective for audits of large accelerated filers for fiscal years ending on or after June 30, 2019; for smaller companies, it is effective for fiscal years ending on or after December 15, 2020. Large accelerated filers, according to the SEC rules, are companies with public floats of more than $700 million.
IFRS Foundation Publishes First Volume of Interpretations Committee’s Decisions
Multinational companies can now gain a better understanding of thorny issues some accountants have flagged in fifteen IFRS standards, including rules on financial instruments, revenue recognition and lease accounting—three of the most significant new accounting changes worldwide. The IFRS Foundation said it has issued the first volume of compiled decisions reached this year by the IFRS Interpretations Committee, the panel that works with the IASB to support consistent application of international financial reporting standards. The document is intended to make the already published work of the committee more accessible. Future compilations will be published twice a year, in April and October, the Foundation said.
Financial Accounting Foundation Opens Search for Executive Director
The Trustees of the Financial Accounting Foundation (FAF) said it has opened the search for an Executive Director, a role previously held by former FAF president and CEO Teresa Polley, who resigned earlier this year to facilitate leadership changes. The executive director will lead a team of approximately 45 professionals who provide crucial support services to the two main U.S. standards-setting bodies, FASB and the GASB. “These services include communications and public affairs, legal, IT, human resources, publishing, financial management, and administration,” according to the announcement. The executive director will also collaborate with the FAF’s chairman to set the organization’s outreach strategy to ensure the proactive, coordinated building and nurturing of relationships with “a multitude of key stakeholders throughout the United States and internationally.” “The FAF executive director plays a vital role in the effective functioning of the standard-setting operation,” FAF Chairman Charles Noski said in a statement. “The FAF team is responsible for a number of important initiatives that directly affect how the boards connect with their stakeholders.”
PCAOB Hires Former EPA Chief Scott Pruitt’s Adviser as CFO
The PCAOB has hired Holly Greaves, former CFO of the Environmental Protection Agency (EPA) and adviser to Scott Pruitt, as the board’s CFO, a move that could intensify criticism that the audit regulator and the SEC, which oversees the board, are partisan and politically motivated. In mid-October 2019, The Wall Street Journal reported that the board has allegedly been plagued with internal strife and slowed inspection and enforcement of audit firms, among other problems. Former and current PCAOB staff members reportedly filed a whistleblower complaint in May that was sent to the SEC in August. The PCAOB normally issues press releases of senior staff appointments, but it did not publicly announce that it had hired Greaves; however, Greaves’s LinkedIn page says that she started in September 2019. According to that same page, Greaves went to work for for then-EPA Administrator Scott Pruitt in January 2017. Pruitt resigned amid ethics probes in July 2018. The PCAOB did not immediately respond to a request for comment.