The Public Company Accounting Oversight Board (PCAOB) 2019 inspections are to focus on technological developments affecting audits.
This will cover the use of audit software tools and also the audit response to risks associated with cybersecurity incidents, digital assets, and distributed ledgers.
The PCAOB’s Inspection Outlook for Audit Committees 2019 informs audit committees the nature of the PCAOB’s inspections and provides guidance for committees on how to further question their auditors in an effort to increase audit quality.
Alongside a focus on technology, the PCAOB outlined other areas of focus:
- Audit firms’ actions addressing past inspection findings in areas of repeat deficiencies, including auditing internal control over financial reporting revenue recognition, allowance for loan losses, and other accounting estimates.
- Audit procedures on new accounting standards, including internal control effects regarding revenue recognition, lease accounting, current expected credit losses, and financial instrument accounting.
- Audit firms’ use of Audit Quality Indicators (AQIs) to monitor their audit work, including any discussions of AQIs with audit committees.
- Implementation of the new auditor’s reporting model requirements, including understanding implementation experiences related to the auditor’s reporting of critical audit matters.
- Audit firms’ systems of quality control, including the firms’ cultures and their policies and procedures, and how firms promote consistency in audit quality.
- Auditor independence, with particular attention to recurring deficiencies in firms’ monitoring procedures to identify independence violations.
The Inspection Outlook is part of the PCAOB’s strategic plan to enhance external engagement and more proactive communication with its stakeholders to inform them about the PCAOB’s core activities and to maintain an ongoing dialogue with them.
The purpose of the audit committee dialogue is to provide further insight into our process and obtain their views. We expect to publish additional updates to audit committees regarding our inspections to provide observations from these interviews and our inspection findings.