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Last week, the PCAOB issued Staff Audit Practice Alert No. 12, which addresses significant audit deficiencies in which auditors, as noted by PCAOB Inspections staff, did not perform sufficient auditing procedures with respect to revenue. In its practice alert, the PCAOB highlights certain requirements of PCAOB standards relating to aspects of auditing revenue that address these significant auditing deficiencies.
We have issued a Flash Report summarizing the key areas addressed in the PCAOB’s practice alert. These issues apply not only to external audit firms, but also many client issuers who must respond and react to changing external auditor requests resulting from the PCAOB’s guidance.