AICPA News
Discussions Continue on Standard-Setting Project on Fraud
The AICPA’s Auditing Standards Board (ASB) discussed a draft proposal to revise its standard on fraud during a meeting on August 22. According to a workplan discussed in May, the ASB is aiming to issue an exposure draft late in the fourth quarter, “Statement on Auditing Standards (SAS), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements,” which would supersede SAS 122, Statements on Auditing Standards: Clarification and Recodification, as Amended, Section 240, Consideration of Fraud in a Financial Statement Audit. It is unclear whether an exposure draft will be issued by the end of the year, as not all outstanding issues will be discussed during the upcoming meeting. Several issues, such as effective date and audit procedures responsive to risks related to management override of controls, will be discussed during a meeting in November. The ASB’s goal is to enhance the auditor’s consideration of fraud in a financial statement audit based on related research carried out in 2022–2023. Moreover, the board is considering convergence with international standards. The International Auditing and Assurance Standards Board (IAASB) issued a proposal on fraud in February. The ASB is also monitoring the PCAOB’s project on fraud, which is on its mid-term agenda.
GASB News
Agenda Cut Amid Accountant Shortage Concerns
GASB has significantly reduced its agenda in response to concerns over a shortage of accountants and financial resources available to state and local governments, GASB Chair Joel Black recently said. Speaking at a trustee meeting, Black acknowledged the ongoing issue of a shortage of skilled accountants in the sector, which has a growing supply-demand gap, impending retirements, and a lengthy hiring process. To address this, GASB has set a high bar for undertaking new projects, ensuring that any changes to U.S. Generally Accepted Accounting Principles (GAAP) will result in significant improvements to financial reporting. “Our agenda is smaller; we have established a really high bar that it needs to have the potential to result in a significant improvement to the financial report,” Black told the Financial Accounting Foundation (FAF) on August 13, 2024. “We have several projects we think met that bar and we’re working on them, but it is an agenda that is at least half the size that it was say four years ago.” GASB, which develops GAAP for state and local governments, has also streamlined footnote disclosures, evaluating existing disclosure requirements to ensure they meet the board’s high standards.
GASB Chair: SEC’s Financial Data Transparency Rule Aligns with Expectations, but Raises Industry Concerns
GASB Chair Joel Black told trustees on August 13 that the SEC’s proposed rule on financial data transparency was largely in line with expectations, but it has sparked concerns in the municipal securities industry over the fate of financial securities identifiers. The SEC’s proposal, issued last week, aims to improve transparency and accountability in government financial data, but has already drawn attention for its impact on the industry. Black said the proposal was largely as expected but noted that the industry is likely to push back on the use of bond identifiers. The surprise in the rule is the elimination of QSIPs (Qualified Statistical Information Providers) in reporting to the Municipal Securities Rulemaking Board (MSRB), Black said. “That I think is going to have a lot of the municipal securities world in somewhat of a reactive phase.” The proposed SEC rule is part of the Federal Data Transparency Act (FDTA), which seeks to standardize government financial reporting. While GASB has been monitoring the rule-making process, Black said the industry is still digesting the implications of the proposal. “They stayed pretty broad and so I think the impact on us and what ultimately may come to the municipal securities environment from the SEC specifically when they do their more specific rule making say two years from now hasn’t been impinged upon,” said Black. “So I think that we haven’t been impacted yet, that more future rule-making will probably be much more impactful.”
