Audit Sampling Audit Guide 2018
A global survey of audit inspection findings released Thursday shows modest improvement over past years in the percentage of engagements with at least one inspection finding, but continued improvements in quality are needed, according to the International Forum of Independent Audit Regulators (IFIAR). In IFIAR’s of 42 audit regulators across the globe, 40% of audit engagements inspected had at least one audit finding. That’s down slightly from 42% in the 2016 survey and 47% in the 2014 survey, which was the first one to track this percentage. Meanwhile, IFIAR’s Global Audit Quality Working Group has seen progress toward its goal of improving the survey results for the six largest network firms. In 2015, the working group set a goal of lowering the number of audits with at least one finding among the six largest network firms to 29% or lower by 2019. At the midpoint of that four-year goal period, the 2017 survey results show a 30% rate of findings among those six firm networks. That’s down from 39% in 2015.
This improvement reflects several years of effort by the six firm networks and their member firms to address audit execution, according to the report. Nonetheless, IFIAR reports that the survey results don’t precisely measure firms’ progress in improving audit quality, and are not the sole factor when considering developments in firms’ progress.
The report also notes that progress has not been experienced in all jurisdictions at the same rate. And although many firms have devoted significant resources to improving their systems of quality control, the survey has not demonstrated any definitive trends related to inspections of quality-control systems. The survey did show improvement in the percentage of findings of four of the five most troublesome audit areas, compared with 2016:. Findings related to accounting estimates, including fair value measurements, fell to 29% from 32%. Findings related to internal control testing fell to 17% from 18%. Findings related to audit sampling fell to 13% from 17%.
Aicpa Audit Sampling Guide 2018 Table A
Findings related to revenue recognition fell to 7% from 13%. The lone area among the five most troublesome audit areas to show an increase over 2016 was group audits, which rose to 13% from 11%. The financial statement years represented in the 2017 survey varied by jurisdiction, as 15% reflected audits of financial statements with fiscal years ending in 2016, 53% with fiscal years ending in 2015, and 32% with fiscal years ending in 2014. — Ken Tysiac ( ) is a JofA editorial director.
Statistical Sampling Audit
The AICPA’s Auditing Standards Board released a proposal redrafting Statement on Auditing Standards (SAS) no. 39, Audit Sampling (AICPA, Professional Standards, vol.
350), according to the board’s clarity drafting conventions and to converge with International Standard on Auditing (ISA) no. 530 (Redrafted), Audit Sampling. While the proposal doesn’t change SAS 39 significantly, according to the ASB, the board is asking for feedback on matters such as whether the proposed SAS should expand on the application guidance of random- based methods to specifically address, for example, block sampling when it is designed to be considered a random-based selection.
The ASB decided not to include block sampling as a selection technique in the proposed SAS because selection techniques are addressed more extensively, and in their proper context, in the AICPA Audit Guide Audit Sampling. Comments are due May 29. The proposal is available. As part of its clarity project, the ASB also released proposed Statement on Auditing Standards (SAS), Initial Audit Engagements, Including Reaudits—Opening Balances. The proposal would supersede SAS no. 84, Communications Between Predecessor and Successor Auditors (AICPA, Professional Standards, vol. The proposal is available.
The International Auditing and Assurance Standards Board (IAASB) completed its clarity project, an initiative to update and reposition auditing standards in a form that is easier to understand, implement and translate. The clarified standards are effective for audits of financial statements for periods beginning on or after Dec. The project closed with the release of the final seven clarified International Standards on Auditing (ISAs). In all, the project gives auditors access to 36 clarified ISAs and a clarified International Standard on Quality Control. The standards are available in a new Clarity Center on the IAASB Web site.
The IAASB is an independent standard-setting board within the International Federation of Accountants (IFAC). “We anticipate that the completion of the clarity project will bring further momentum to the convergence process,” Jim Sylph, IFAC’s executive director, professional standards, said in a press release. The PCAOB announced March 16 that it was seeking SEC approval to raise the 2009 accounting support fee from $151.8 million to $157.4 million. The increase would be a 3.7% hike from the fee the SEC approved in December. The additional funds would be held in reserve until the PCAOB and the SEC have approved a supplemental PCAOB budget.
The PCAOB warned in a letter to the SEC that its normally high collection rate may dip given the flagging economy. The board also wants to consider whether to submit to the SEC a supplemental budget request to implement any new legislation related to oversight of nonpublic broker-dealer auditors, should the PCAOB gain such authority. Separately, the board was mulling a supplemental request to strengthen the PCAOB’s non-U.S.
Inspections program; enhance documentation of planning and fieldwork of inspections; and enhance the PCAOB’s enforcement resources. The PCAOB sought comments for a second time on an auditing standard on Engagement Quality Review (EQR).
The board first proposed a new standard on EQR on Feb. The board has since made extensive changes to the original proposal and is now seeking comment on the revised EQR standard.
The proposal would supersede the board’s quality control standard, SECPS Requirements of Membership, Section 1000.08(f). The proposed standard would apply to all audit engagements and engagements to review interim financial information conducted pursuant to the standards of the PCAOB.
It provides a framework for an engagement quality reviewer to objectively evaluate the significant judgments made by the engagement team and the conclusions reached in forming an overall conclusion on the engagement. “This proposed EQR standard focuses the engagement quality reviewer’s attention on those matters that increase the likelihood of identifying and correcting significant engagement deficiencies before the audit report is issued,” PCAOB Chairman Mark W.
Olson said in a press release. Comments on the proposal, available at, were due April 20.