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Financial Reporting and Regulatory Update

Second Quarter 2018

From the PCAOB

The PCAOB’s Future – William D. Duhnke, Chairman

PCAOB Chairman William Duhnke, on May 17, 2018, addressed the University of Kansas Auditing Symposium, where he discussed the first-ever request for public comment on the PCAOB’s strategic plan and covered principles that will guide the board’s actions and decisions. He shared a number of items that the board is considering in order to improve audit quality through inspections, as well as improving the reporting and communicating inspection results. The chairman also discussed approaches by audit regulators in other countries that could inform the board’s views.

Before closing, he posed a number of questions that the board must consider as it evaluates improvements to its programs that go beyond the inspections program.

Strategic Plan for 2019

The newly appointed board is seeking feedback from the public on its priorities over the next five-year cycle that will begin in 2019. On April 17, 2018, the PCAOB released a survey to gather views from external parties interested in the work of the board, including investors, auditors, preparers, audit committee members, and academics.

The survey closed on May 15, 2018.

2017 Annual Report

On May 2, 2018, the PCAOB made public the 2017 annual report that it submitted to the SEC, as required by Sarbanes-Oxley. The report provides an overview of the board’s activities for 2017, including public accounting firm registrations, inspections, standard setting, and enforcement actions, in addition to its audited financial statements and notes for 2017.

Standing Advisory Group (SAG) Meeting

The PCAOB’s SAG met June 5-6, 2018, in Washington, D.C. The SAG comprises various stakeholders – investors, auditors, audit committee, members, public company executives, and others – and advises the PCAOB on audit and professional practice matters.

Meeting topics included the following:

  • Panel discussion with the new board
  • PCAOB standard-setting update
  • Data and technology
  • Cybersecurity
  • Corporate culture implications for the audit
  • Revised auditor’s reporting model implementation

Personnel Changes

The PCAOB announced, on May 22, 2018, that Chief Auditor Martin F. Baumann would leave the board after 12 years of service. The PCAOB also announced, on May 18, 2018, that Director of Registration and Inspections Helen Munter would leave the board after 14 years of service. Finally, the PCAOB announced that Director of Enforcement and Investigations Claudius Modesti would leave the agency after 14 years of service, and Director of the Office of Information Technology Nirav Kapadia left after seven years of service.

All departures were effective by the end of May 2018.