December 4, 2014

New CAQ Alert Highlights Key Risk Areas for 2014 Audit Cycle

Washington, D.C. – To help public company auditing firms address risks in a proactive and accelerated manner, the Center for Audit Quality (CAQ) has published a member alert, Select Auditing Considerations for the 2014 Audit Cycle. Intended to remind member firms of certain auditing considerations that may be relevant for the 2014 audit cycle, the alert identifies and discusses some of the more judgmental or complex audit areas, including those that have recently been the subject of attention and focus by regulators. 

“This alert summarizes potential areas of risk and can be a useful resource for our auditing firm members as they head into the 2014 audit cycle,” said CAQ Executive Director Cindy Fornelli. “The CAQ will update the alert annually as a part of the profession’s commitment to a continuous cycle of improvement.”

The 2014 alert covers the following auditing considerations: 

  1. Revenue Recognition
  2. Going Concern
  3. Internal Control Over Financial Reporting (ICFR)
  4. Auditing Accounting Estimates, Including Fair Value Measurements
  5. Engagement Quality Review
  6. Professional Skepticism
  7. Related Parties and Amendments to Certain PCAOB Auditing Standards Regarding Significant Unusual Transactions

On revenue recognition, for example, the alert provides an overview of recent regulatory developments including PCAOB Staff Audit Practice Alert No. 12Matters Related to Auditing Revenue in an Audit of Financial Statements (Practice Alert No. 12), issued in September 2014, as well as the converged accounting standard on revenue recognition adopted jointly in May 2014 by the Financial Accounting Standards Board and the International Accounting Standards.

Given the critical importance of internal control over financial reporting, the alert also provides the latest information and developments identified through the PCAOB inspection process on ICFR and other highlighted areas. 

“The inspection process offers valuable information that the profession considers carefully as it approaches its critical work,” added Fornelli. 

The new alert is publicly available here.

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About the CAQ

The Center for Audit Quality (CAQ) is an autonomous, nonpartisan public policy organization dedicated to enhancing investor confidence and public trust in the global capital markets. The CAQ fosters high quality performance by public company auditors, convenes and collaborates with other stakeholders to advance the discussion of critical issues requiring action and intervention, and advocates policies and standards that promote public company auditors’ objectivity, effectiveness, and responsiveness to dynamic market conditions.  Based in Washington, DC, the CAQ is affiliated with the American Institute of CPAs. For more information, visit www.thecaq.org.