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SubscribePCAOB Posts Board Policy Statement on Evaluating the Reliability of External Electronic Information Provided by the Company
Today, the Public Company Accounting Oversight Board (PCAOB) released a Board policy statement to assist auditors in implementing paragraph .10A of AS 1105, Audit Evidence.
PCAOB Board Policy Statement Regarding Implementation of Paragraph .10A of AS 1105, Audit Evidence
On June 12, 2024, the PCAOB adopted amendments to AS 1105, Audit Evidence. The amendments become effective for audits of financial statements for fiscal years beginning on or after December 15, 2025.
Among other updates, the amendments added new paragraph .10A to AS 1105, under the heading, “Evaluating the Reliability of External Information Provided by the Company in Electronic Form.” Paragraph .10A requires auditors to evaluate the reliability of external electronic information provided by the company by: (a) obtaining an understanding of the source and of the company’s process for receiving, maintaining, and processing the information; and (b) testing the information or the relevant controls. Paragraph .10A does not prescribe the nature, timing, or extent of procedures. Instead, the requirements are principles-based and scalable.
During the rulemaking process, commenters requested implementation guidance on paragraph .10A, particularly with respect to paragraph .10A(b)’s testing requirements. In approving the amendments, the SEC encouraged the PCAOB to issue such guidance. The Board policy statement provides information relevant to the implementation of paragraph .10A(b), describing certain circumstances in which the Board will not treat the absence of separate testing under paragraph .10A(b) as noncompliance with PCAOB auditing standards.
Staff guidance will be issued by the Office of the Chief Auditor to illustrate the scope and application of the Board policy statement and provide additional examples of the application of paragraph .10A(b).
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