CAQ Snapshot: May 2019
Wednesday, May 29, 2019
CAQ Announces New Rounds of Research Grants
Furthering its commitment to independent auditing-related research, the Center for Audit Quality (CAQ) has announced grant awards from its two flagship research programs. First, the CAQ and the Auditing Section of the American Accounting Association (AAA) announced four awards for theAccess to Audit Personnel Program, which connects academics with audit practitioners to participate in projects conducted by researchers. This year’s awardees will have access to 550 audit staff and managers at CAQ Governing Board firms.
“The Access to Audit Personnel Program’s role of connecting researchers with real-life auditors is important and unique,” said Kathryn Kadous, President of the AAA Auditing Section and Schaefer Chaired Professor of Accounting and Director and Associate Dean of PhD Program at Emory University’s Goizueta Business School. “We look forward to seeing the insights generated by these projects.”
Separately, the CAQ’s Research Advisory Board, which is comprised of members from academia and the auditing profession, selected five projects on the following topics: evidence collection, auditor mindsets, the impact of interactions in financial reporting on audit quality, artificial intelligence tools in auditing, and enhancing the exercise of professional skepticism.
New Tool Helps Audit Committees Oversee
Implementation of New Credit Losses Standard
The CAQ has published a new tool designed to help audit committees exercise their oversight responsibilities as companies implement a new credit losses accounting standard that will take effect in January 2020.
“The new standard has broad implications and will fundamentally change how companies account for credit losses,” said CAQ Executive Director Julie Bell Lindsay. “Investors are looking to understand the impact of the new standard, and our tool is designed to help audit committee members, auditors, and company management understand that impact and to plan for a timely implementation.”
The CAQ tool, Preparing for the New Credit Losses Standard: A Tool for Audit Committees, includes an overview of the new standard and offers key questions and resources for audit committee members to consider. Additionally, the publication features a list of resources produced by leading auditing firms and the American Institute of CPAs.
CAQ Examines Use of Emerging Tech in
Financial Reporting Context
Building on its efforts related to the audit profession of the future, the CAQ released a new resource, Emerging Technologies, Risk, and the Auditor’s Focus: A Resource for Auditors, Audit Committees, and Management. The publication explores the financial reporting implications related to evolving use of technology such as artificial intelligence, the internet of things, and smart contracts.
A follow-up to the CAQ’s 2018 publication Emerging Technologies: An Oversight Tool for Audit Committees, this 2019 resource enumerates key risks—and sheds light on auditor considerations regarding those risks. It also delves into areas of auditor focus related to the impact of emerging technology on business, internal control over financial reporting, and audit committee oversight.
Guide to ICFR Updated
On May 9, the CAQ released an updated version of its Guide to Internal Control over Financial Reporting. First published in 2013, this guide provides the public with an easy-to-digest overview of internal control over financial reporting (ICFR), focusing on key ICFR concepts such as the control environment, control activities, reasonable assurance, and the hierarchy of ICFR deficiencies. The guide also educates readers on the various ICFR roles and responsibilities for management, audit committees, and auditors.
New for the 2019 edition, the guide contains additional information highlighting the significant body of research demonstrating the importance of ICFR to fighting fraud, enhancing investor confidence, and strengthening the financial reporting process. You can find the guide and other ICFR resources at the CAQ’s ICFR collection.
CAQ’s Ide Provides Insights on
Critical Audit Matters
In this May 2019 episode of Inside America’s Boardrooms, get insights on critical audit matters (CAMs) from Catherine Ide, CAQ Managing Director of Professional Practice and Member Services. Among other topics, Ide discusses CAMs basics, the distinction between CAMs and critical accounting estimates, and CAMs-related challenges for audit committees. She also cites helpful recent publications and guidance from the Public Company Accounting Oversight Board.
#ConfidentTogether: Focus on Skepticism
Throughout 2019, the CAQ is shining a spotlight on the core values and themes that define public company auditing profession. In May, the CAQ has highlightedskepticism. June’s theme will be objectivity. Follow along and join the conversation on social media using #ConfidentTogether.
Join the CAQ at These Upcoming Events
SEC Historical Society Commemorative Program and Dinner
June 3; Washington, DC
At this event, the SEC Historical Society will celebrate the 85th anniversary of the Securities and Exchange Commission.
American School Counselor Association Annual Conference
June 29–July 2; Boston, MA
As a part of the Discover Audit Program, the CAQ is happy to sponsor the American School Counselor Association’s annual conference.