Support Learning and Insight

It’s more important than ever to understand the challenges facing financial executives. Support the Financial Education & Research Foundation today.

Financial Reporting and Regulatory Update

Third Quarter 2018

From the PCAOB

Auditor’s report changes

The PCAOB updated, on Aug. 23, 2018, its staff guidance on changes to the auditor’s report that took effect for calendar year-end audits of Dec. 31, 2017, annual financial statements. The updates to the guidance relate to the following topics:

  • Voluntary disclosure of certain audit participants
  • Auditor tenure
  • Auditor reporting on internal control over financial reporting
  • Explanatory and emphasis paragraphs
  • Auditor reporting on supplemental information, interim financial information, and special reports

Broker-dealer inspection report

On Aug. 20, 2018, the PCAOB released its report on 2017 inspections of broker-dealer auditors. The executive highlights accompanying the report include the following important points:

  • “Auditors should focus on improving their quality control systems to perform high quality audits and attestation engagements.
  • “Overall deficiencies remained high, although inspectors found fewer independence violations than in past years.
  • “Broker-dealer owners and audit committees (or equivalent) are encouraged to discuss these results with their auditors.”

Draft five-year plan

On Aug. 10, 2018, the PCAOB released a draft of its five-year strategic plan and, for the first time ever, is seeking public comment on the plan.
The draft plan contains five strategic goals:

  • “Drive improvement in the quality of audit services through a combination of prevention, detection, deterrence, and remediation
  • “Anticipate and respond to the changing environment, including emerging technologies and related risks and opportunities
  • “Enhance transparency and accessibility through proactive stakeholder engagement
  • “Pursue operational excellence through efficient and effective use of our resources, information, and technology
  • “Develop, empower, and reward our people to achieve our shared goals”

Comments were due Sept. 10, 2018.