PCAOB Issues Staff Audit Practice Alert on Audit Considerations In the Current Economic Environment
The Public Company Accounting Oversight Board today issued a Staff Audit Practice Alert to assist auditors in identifying matters related to the current economic environment that might affect audit risk and require additional emphasis in audits of financial statements and audits of internal control over financial reporting.
"This alert is intended to highlight special auditing challenges and risks posed by the current economic environment, including fraud risk, as auditors gear up to complete their year-end auditing for 2008 and for as long as current conditions persist," said Tom Ray, Chief Auditor and Director of Professional Standards.
The Staff Audit Practice Alert discusses the following six matters:
- Overall audit considerations
- Auditing fair value measurements
- Auditing accounting estimates
- Auditing the adequacy of disclosures
- Auditor’s consideration of a company’s ability to continue as a going concern
- Additional audit considerations for selected reporting areas
These alerts are prepared by PCAOB staff to highlight new, emerging, or otherwise noteworthy circumstances that may affect how auditors conduct audits under the existing requirements of PCAOB standards and relevant laws. The statements contained in Staff Audit Practice Alerts are not rules of the Board and do not reflect any Board determination or judgment about the conduct of any particular firm, auditor, or any other person.
This is the third Staff Audit Practice Alert that the PCAOB has issued to date. The first alert was issued in July 2006 on the topic of options backdating. The second alert was issued in December 2007 on auditing fair value measurements in financial statements. All alerts are available on the PCAOB Web site.