PCAOB PROPOSES STANDARDS FOR AUDIT RISKWashington, D.C. - The Public Company Accounting Oversight Board has voted to propose seven new auditing standards related to risk assessment.
The proposed standards would supersede the board's interim auditing standards related to audit risk and materiality, audit planning and supervision, consideration of internal control in an audit of financial statements, audit evidence, and performing tests of accounts and disclosures before year end.
The standards would establish requirements and provide direction on audit procedures, from the initial planning stages through the evaluation of the audit results.
The proposals cover the auditor's responsibilities for reducing audit risk to an appropriately low level, audit planning and supervision, identifying and assessing the risks of a material misstatement, responding to the risks of a material misstatement, evaluating audit results, considering materiality in planning and performing an audit, and determining the sufficiency of audit evidence.
To read the standards, visit www.pcaobus.org. The PCAOB is providing a 120-day comment period, ending Feb. 18, 2009.
BANKERS CALL FOR NEW ACCT'G OVERSIGHT
Washington, D.C. - The dispute between the American Bankers Association and the Financial Accounting Standards Board escalated as ABA president Edward Yingling called for a new accounting oversight board that would hold sway over FASB. In testimony before the House Financial Services Committee, Yingling criticized the Securities and Exchange Commission's existing oversight of FASB, and said that a new oversight board was needed.
"Now that it has become apparent that accounting rules can have deep economic and systemic effects, Congress should consider whether that authority properly rests within the SEC," he said. "Accounting policy can no longer be divorced from its impact; the results on the economy and on the financial system must be considered."
The ABA is calling on Congress to establish an accounting oversight board, headed by the chairman of an overall "systemic oversight regulator" for the entire financial system. The SEC chairman might sit on such a board, Yingling suggested, along with other regulators and a Treasury Department representative. The oversight board would delegate basic rulemaking to an organization like FASB.
FASB spokesman Neal McGarity declined to comment.
The ABA has been pressuring FASB to loosen fair value and mark-to-market accounting standards, and the SEC has begun a study of the standards mandated by the Emergency Economic Stabilization Act. In mid-October, Yingling wrote to SEC Chairman Christopher Cox asking him to override FASB's recent guidance on fair value accounting.
TREASURY HIRES PWC AND E&Y FOR BAILOUT
Washington, D.C. - The Treasury Department has selected two of the Big Four accounting firms, PricewaterhouseCoopers and Ernst & Young, to help administer the Emergency Economic Stabilization Act's Troubled Asset Relief Program.
The firms will help with accounting and internal controls services for the troubled assets that the Treasury will purchase, including loans and mortgage-backed securities. PwC will specifically help with establishing internal controls, while Ernst & Young will provide general accounting support and advice.
Both contracts last until Sept. 30, 2011. The initial orders under PwC's contract are for $191,469.27, while Ernst's initial orders are more than double that, at $492,006.95.
The Treasury said that it solicited quotes from 12 different firms and received six responses.
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