BROKER DEALER AUDITS: Proposed Standards for Attestation Engagements Related to Broker and Dealer Compliance or Exemption Reports Required by the U.S. Securities and Exchange Commission and Related Amendments to PCAOB Standards , (see also statements of PCAOB Board Members on this proposal), and
AUDITS OF ALL ISSUERS: Proposed Auditing Standard on Auditing Supplemental Information Accompanying Audited Financial Statements and Related Amendments to PCAOB Standards (see also statements of PCAOB Board Members on this proposal)
Scope and Objective of Proposal on Auditing Supplemental Information
As described in the PCAOB’s press release, the proposal on auditing supplemental information would:
- supersede the [PCAOB] Board's auditing standard, AU sec. 551, Reporting on Information Accompanying the Basic Financial Statements in Auditor-Submitted Documents, and related amendments, and
- establish the auditor's responsibilities when the financial statement auditor is engaged to audit and report on supplemental information that accompanies the audited financial statements.
- The proposed standard also would apply to certain supplemental information of issuers that is included in SEC filings.
The proposed standard would apply when the auditor of the company's financial statements is engaged to audit and report on supplemental information that accompanies the audited financial statements. Such supplemental informationEffective Date
The auditor's standard report includes an opinion on the financial statements.
- the supporting schedules prepared pursuant to SEC Rule 17a-5,
- supplemental information required to be prepared pursuant to the rules and
regulations of a regulatory body other than the SEC and included in an SEC
filing, and information included in SEC filings that is ancillary to the audited financial statements, derived from the company's accounting books and records, and not otherwise required to be prepared pursuant to the rules and
regulation of the SEC or another relevant regulatory body.
- Historically, when auditors reported on supplemental information, they often
expressed their opinions on the supplemental information "in relation to" the
financial statements as a whole. Audit procedures regarding that
supplemental information generally have been performed in conjunction with the audit of the financial statements.
- Indeed, the auditor's report on supplemental information currently required
under AU sec. 551 is rooted in the concept that the supplemental information is
presented in relation to the financial statements as a whole.
- The proposed standard retains the existing "in relation to" language in the
- The proposed standard establishes procedural and reporting responsibilities
for the auditor regarding supplemental information accompanying financial
statements. The proposed standard enhances existing PCAOB standards by:
- Requiring the auditor to perform certain audit procedures to test and
evaluate the supplemental information, and
- Establishing requirements that promote enhanced coordination between the
work performed on the supplemental information with work performed on the
financial statement audit and other engagements, such as a compliance
attestation engagement for brokers and dealers.
- The proposed standard would not apply to schedules prepared pursuant to SEC
Regulation S-X, 17 CFR § 210 because those schedules are deemed to be part of
the financial statements.
- Appendix 3 in the proposing release “describes how the proposed standard and
related amendments would change the requirements in existing PCAOB auditing standards.”
The proposing release states: “The Board expects that the proposed standard would beeffective for fiscal years ending on or after September 15, 2012, subject to approval by the SEC.”
The comment deadline on both of the above proposals is September 12.
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