PCAOB Q&A ON ENGAGEMENT QUALITY REVIEWS

Washington, D.C. - The Public Company Accounting Oversight Board has published a set of questions and answers from its staff to explain the documentation requirements behind the recently issued Engagement Quality Review standard.

The new auditing standard aims to toughen the requirements for concurring reviews of the work of audit teams. Auditing Standard No. 7 provides a framework for the engagement quality reviewer to objectively evaluate the significant judgments made and related conclusions reached by the engagement team.

The staff Q&A document provides implementation guidance. However, the PCAOB cautioned that the statements contained in the staff questions and answers are not rules of the board, nor have they been approved by the board.

IRS MADE TRADE-OFFS IN IMPLEMENTING RECOVERY ACT

Washington, D.C. - The Internal Revenue Service needed to scramble to implement various provisions of last year's Recovery Act to boost the economy as quickly as possible, but it now has to improve its enforcement and reporting to safeguard against abuses, according to a government report.

Responding quickly to the Recovery Act involved trade-offs, according to a study by the Government Accountability Office. For example, because of the compressed time to implement the 2009 First-Time Homebuyer Credit, the IRS did not make computer changes to collect data, including the home purchase date. Without such data, the IRS was unable to easily distinguish 2008 and 2009 credits. "Distinguishing between the two credits is critical because they involve different requirements, including whether and how the credit is to be repaid," said the GAO. The IRS found that many taxpayers claimed the credit who were unqualified or submitted fraudulent or erroneous claims.

The IRS has taken some steps to mitigate abuses. As a result of its pre-refund compliance reviews, as of Feb. 1, 2010, the IRS had frozen about 140,000 refunds pending civil or criminal examination, and, as of Dec. 2, 2009, it had identified 175 criminal schemes and had 123 criminal investigations open.

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