PCAOB Issues Alert on Fair Value and Impairments

The Public Company Accounting Oversight Board has published a staff audit practice alert explaining the potential auditing and review implications of the Financial Accounting Standards Board’s recently revised standards on fair value accounting.

The alert aims to inform the auditors of public companies about the potential implications on their reviews of interim financial information and annual audits of three recently issued FASB staff positions on fair value and mark-to-market accounting. FASB issued the controversial standards under pressure from Congress and banking interests on an accelerated three-week schedule.

“This alert is intended to remind auditors of their responsibilities in conducting reviews of interim financial information and annual audits in light of the new FSPs related to fair value measurements and other-than-temporary impairments,” said PCAOB chief auditor Martin F. Baumann in a statement. “The alert will be helpful to auditors as they conclude their work related to the first quarter of 2009 or prepare for the review of the second quarter and the audit of the financial statements, including the integrated audit.”

The alert discusses reviews of interim financial information, disclosures, auditor reporting considerations, and audits of financial statements, including integrated audits.