Corporate and Financial Weekly Digest - July 8, 2011
Mondaq Business Briefing › United States Law Articles in English (2011)
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Corporate and Financial Weekly Digest - July 8, 2011
Edited by Robert L. Kohl and David A. Pentlow
SEC/CORPORATE PCAOB Proposes to Change Form and Content of Audit Reports On June 21, the Public Company Accounting Oversight Board (PCAOB) issued a Concept Release in which it proposed potential alternatives for changing the content of audit reports in order to "provide investors with more transparency into the audit process and more insight into the company's financial statements or other information outside the financial statements." The proposed alternatives (which are not mutually exclusive) include: Auditor's Discussion and Analysis – A revised auditor reporting model could include a supplement to the auditor's report in which the auditor would be required to provide additional information about its audit and the company's financial statements in a so-called "Auditor's Discussion and Analysis" (AD&A). The AD&A could include information regarding audit risk identified in the audit, audit procedures and results, auditor independence and a discussion of the auditor's views regarding the company's financial statements, such as management's judgments and estimates, accounting policies and practices and difficult or contentious issues, including "close calls" reflected in the financial statements. The AD&A could also highlight areas where the auditor believes management could have applied different accounting or disclosures. Emphasis Paragraphs – Another alternative could require and expand the use of emphasis paragraphs in the auditor's report in order to emphasize a matter regarding the financial statements. Emphasis paragraphs could be required with respect to financial statement disclosure involving significant management judgments and estimates, significant measurement uncertainty and other areas that the auditor determines are important for a better understanding of the financial statements. Auditor Assurance on Information Outside the Financial Statements – Another alternative could require auditors to provide assurance on information outside the financial statements, such ...See the full content of this document
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