Erica Williams Sworn in as Chair
Erica Williams was sworn in as chair of the PCAOB on January 10, 2022. The board now has a full complement of five members. “In our dynamic and evolving capital markets, the PCAOB’s mission to protect investors and further the public interest is extremely important,” Williams said in a statement. “I am honored to take up this mission and to lead this organization’s dedicated, talented staff. Together, we have an extraordinary opportunity to build trust through robust oversight and engagement.” The SEC appointed Williams, along with three other members, in November 2021. The SEC oversees the PCAOB. Williams comes from Kirkland & Ellis LLP, where she was a litigation partner. The PCAOB said that she served as a special assistant and associate counsel to President Barack Obama. Before working at the White House, Williams served as deputy chief of staff for three SEC chairs. Williams’s initial term ends on October 24, 2024.
Disclosure Rules for Reporting Financial Distress to Be Overhauled
Accounting rules for when state and local governments should evaluate and disclose their exposure to severe financial distress will be revised, according to a January 6 GASB alert. The board added a major project to its technical agenda to address issues related to going concern uncertainties and severe financial stress. Currently, GASB standards do not contain guidance for early disclosure by which a government evaluates its exposure to severe financial stress and the specific circumstances that require disclose about that exposure. The project will therefore address diversity in practice and clarify the circumstances under which disclosure is appropriate; develop a definition of severe financial stress and criteria for identifying when governments should disclose their exposure to severe financial stress; and clarify what information about a government’s exposure to severe financial stress is necessary to disclose. The guidance would provide financial statement users with quicker and clearer information about a somewhat murky issue, according to a board research paper. The project was added in December 2021. Discussions will begin in July, according to the board’s work plan. Rules are projected to be issued in 2026.
Auditing Standards Board to Discuss Draft Proposal on Group Audits
During a virtual meeting slated for January 25–27, the AICPA’s Auditing Standards Board (ASB) will discuss a draft proposal related to group audits. The task force that has been working on the project hopes the board will be able to vote on issuing a proposal at its March meeting, according to a discussion paper prepared ahead of the meeting. The task force has drafted proposed AU-C section 600, “Special Considerations—Audits of Group Financial Statements (Including the Work of Component Auditors).” Existing AU-C 600 gives the option for the group auditor to assume responsibility of the work of a component auditor or not assume the responsibility for it. In the latter case, the group auditor would “make reference” (MR) to the component auditor in the auditor’s report. The ASB task force believes that the proposed standard should include all of the paragraphs related to making reference together in one section towards the end of the standard instead of developing a separate MR standard. Among other things, the task force says that approach means that pervasive changes to ISA 600 will not need to be made; potential confusion about circumstances in which the standard will apply will be eliminated; and the guidance will be easier to apply.