CAQ Snapshot: December 2018

Tuesday, December 18, 2018

Robust Dialogue on Display at AICPA Conference in Washington


From left to right, SEC Chairman Clayton, Chief Accountant Bricker, and the CAQ’s Fornelli

At the 2018 Conference on SEC and PCAOB Developments, an event hosted each December by the American Institute of CPAs (AICPA), top financial market regulators expressed a strong commitment to dialogue and constructive engagement with the accounting profession and others in the financial reporting supply chain.


Fornelli with, left to right, PCAOB Board Members Hamm, Brown, DesPartes, Kaiser, and Duhnke.

“Company disclosure, including financial reporting, has to evolve as our economies evolve,” said Securities and Exchange Commission (SEC) Chairman Jay Clayton in a Q&A session moderated by Center for Audit Quality (CAQ) Executive Director Cindy Fornelli and featuring SEC Chief Accountant Wesley Bricker. “To the extent that you have ideas on how we should evolve,” Clayton added, “we are all ears.”

The spirit of dialogue was also evident in another session moderated by Fornelli, this one featuring all five Board Members of the Public Company Accounting Oversight Board (PCAOB). The session covered Board Member views on a range of topics, including the PCAOB’s organizational strategy, its priorities for 2019, and its willingness to evolve in key areas such as audit inspections. “Nothing is off the table,” said PCAOB Chairman William Duhnke on the latter topic.

CAQ Provides Lessons Learned from Dry Runs on Critical Audit Matters

Robust communication and planning will be required to effectively determine and communicate critical audit matters (CAMs) in the updated auditor’s report, according to a new resource from the CCAQ. The publication, Critical Audit Matters: Lessons Learned, Questions to Consider, and an Illustrative Example, presents early lessons learned from “dry runs” that certain CAQ member firms have conducted on CAMs.

“The updated auditor’s report presents an excellent opportunity to enhance transparency and strengthen investor trust,” says CAQ Executive Director Cindy Fornelli. “Building on the public company auditing profession’s proactive engagement around auditor reporting, this publication’s insights will be valuable for auditors, audit committees, financial executives, investors, and others ahead of important implementation deadlines for critical audit matters in 2019 and 2020.”

New CAQ Tool Helps Audit Committees Address Impact of Emerging Tech

A new resource from the CAQ, Emerging Technologies: An Oversight Tool for Audit Committees, provides a framework and questions audit committees may ask management and auditors to help inform their oversight of financial reporting as emerging technologies take hold.

Leveraging the work of the Committee of Sponsoring Organizations of the Treadway Commission, the CAQ’s oversight framework has five key categories:

  • Understand the Company’s Emerging Technology Strategy and Any Specific Technologies Contemplated
  • Understand Management’s Risk Identification and Assessment Process
  • Understand the Control Activities in Place that Respond to the Identified Risks
  • Establish Information and Communication Protocols
  • Monitor Emerging Technology Activities

Under each category the publication provides questions to spark dialogue among audit committees, auditors, management, and others. Additionally, the tool highlights how two technologies—artificial intelligence and robotic process automation—are gaining significant traction in the financial reporting environment.

Fornelli Reflects on “Power of Working Together”

At the end of the calendar year—and ahead of her announced retirement in the spring of 2019—Cindy Fornelli shared reflections in a LinkedIn commentary highlighting one overarching idea that connects many of her experiences over 12 years as the CAQ’s Executive Director: “Working together, we gain strength and confidence.” 

“Auditors are gatekeepers who are integral parts of numerous systems, notably our systems of financial reporting and of investor protection,” writes Fornelli. “Thus, we communicate, collaborate, and engage with other components in those systems to make the whole thrive.”

Fornelli’s post was part of the CAQ’s December focus on “reflection,” the final monthly theme under 2018’s #BuildingaBedrock campaign. In the year ahead, watch for more thematic communications from the CAQ speaking to the multifaceted work, priorities, and values of the public company auditing profession.

Join the CAQ at These Upcoming Events

KPMG Board Leadership Conference
January 7–9; Orlando, Florida

We look forward to seeing our director colleagues at the KPMG Board Leadership Conference, where conversations will cover the challenges and priorities shaping board agendas in the year ahead. On January 8, Cindy Fornelli will join Frank Casal, Vice Chair of Audit at KPMG, Tom Kim, Partner at Sidley Austin, and Sherry Smith, an Independent Director at Deere & Company, Piper Jaffray, Realogy Holdings Corp., and Tuesday Morning Corp., to discuss the 2019 audit committee agenda.  

American Accounting Association (AAA) Auditing Section Midyear Meeting
January 17–19; Nashville, Tennessee

On January 18, Cindy Fornelli will moderate a panel at the AAA Auditing Section Midyear Meeting on “The PCAOB’s New Strategic Plan: What Will It Mean for the Auditing Profession?” Panelists include Wesley Bricker, SEC Chief Accountant; Abe Dymond, PCAOB Chief of Staff; Trent Gazzaway, National Managing Partner for Quality and Innovation, Audit Services, Grant Thornton; and Joe Ucuzoglu, Chairman & CEO, US Audit & Assurance Leadership, Deloitte & Touche LLP.  

New York University (NYU) and Council of Institutional Investigators (CII) Corporate Governance Bootcamp
January 22–24, New York, New York

The CAQ is delighted to participate in the Corporate Governance Bootcamp that will be held in collaboration with CII and the Institute for Corporate & Finance at the NYU School of Law.  

International Corporate Governance Network (ICGN) Amsterdam
February 12–13; Amsterdam, Netherlands

We look forward to seeing our international investor and governance colleagues at ICGN’s annual conference, where topics will include the future of the audit firm, corporate reporting, artificial intelligence, and the board room, among others.   

Association of Securities and Exchange Commission Alumni (ASECA) Annual Dinner
February 21; Washington, DC

The CAQ looks forward to being a sponsor at the ASECA Alumni Annual Dinner, supporting ASECA’s mission to provide the opportunity for education and growth of industry professionals in the field of securities law.