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Earlier this month, the PCAOB adopted a new auditing standard and various amendments to other auditing standards to strengthen auditor performance requirements in three challenging areas:
• Related party transactions;
• Significant unusual transactions; and
• A company's financial relationships and transactions with its executive officers.
The board’s intent in addressing these transactions and relationships is to improve existing standards by requiring additional procedures in each of these areas and provide direction to ensure the auditor’s approach to these areas is sufficiently risk-based and appropriately coordinated.
This Flash Report summarizes the PCAOB’s new auditing standard and the board’s various amendments, along with the implications for auditors and companies. The requirements will be effective for calendar year 2015 audits, including interim periods (e.g., required for fiscal years beginning on or after December 15, 2014). They will apply to audits of companies listed on exchanges in the United States.