Tuesday, January 18, 2011

PCAOB Publishes Final Standards 8-15 on Risk, Materiality; Staff Practice Alert 7 on Litigation, Contingencies

Earlier today (January 18), the PCAOB published final Auditing Standards No. 8-15 on the auditor's assessment of, and response to risk, and related amendments to existing standards.

These final standards were approved by the SEC on Dec. 23, 2010, following the SEC's Notice and Comment period, and approval thereafter by the Commission. This procedure, in effect a secondary level approval process after approval of auditing standards by the PCAOB board, was set forth in the Sarbanes-Oxley Act.

The final standards published by the PCAOB on January 18 include:

PCAOB Staff Audit Practice Alert 7 on Litigation
Separately, as highlighted by Broc Romanek in TheCorporateCounsel.net Blog today (Jan. 18), the PCAOB published on Dec. 20 PCAOB Staff Audit Practice Alert No. 7, "Auditor Considerations of Litigation and Other Contingencies Arising from Mortgage and Other Loan Activities." See also PCAOB's press release.

Romanek notes that the PCAOB release is in addition to a related SEC 'Dear CFO' letter released in the fall; see our previous posts on the SEC's Dear CFO Letter, and on the status of FASB's related project on contingency disclosures, including litigation.

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