PCAOB on Communications with Audit Committees Flashcards
What should be communicated to the Audit Committee?
1 The conduct of an audit
2 Obtain information from the audit committee relevant to the audit
3 Establish an understanding of the terms of the engagement with the audit committee and to obtain an engagement letter
Who is part of the Audit Committee?
A committee (or equivalent body) established by and among the board of directors of a company for the purpose of overseeing the accounting and financial reporting processes of the company and audits of the financial statements of the company
What is a Critical Accounting Estimate?
An accounting estimate where (a) the nature of the estimate is material due to the levels of subjectivity and judgment necessary to account for highly uncertain matters or the susceptibility of such matters to change and (b) the impact of the estimate on financial condition or operating performance is material
What are Critical Accounting Policies and Practices?
A company’s accounting policies and practices that are both most important to the portrayal of the company’s financial condition and results
What are the 12 items the affect the Results of the Audit that should be communicated to the audit committee?
1 Accounting Policies and Practices, Estimates, and Significant Unusual Transactions
2 Auditor’s Evaluation of the Quality of Financial Reporting
3 Other Information in Documents Containing Audited Financial Statements
4 Difficult or Contentious Matters
5 Management Consultation with Other Accountants
6 Going-Concern Issues
7 Uncorrected and Corrected Misstatements
8 Material Written Communications
9 Departure from the Auditor’s Standard Report
10 Disagreements with Management
11 Difficulties Encountered in Performing the Audit
When should the Auditor communicate to the audit committee?
On a timely basis and prior to the issuance of the auditor’s report
