PCAOB Issues Audit Practice Alert Regarding Options

The Public Company Accounting Oversight Board (PCAOB) on Friday announced an initiative to publish, from time to time, Audit Practice alerts issued by the Board’s staff. In addition, the Board, prompted by recent reports and disclosures about issuer practices related to the granting of stock options, including the “backdating” of such grants, issued a practice alert, “Matters Relating to Timing and Accounting for Options Grants.”


Advertisement


Thousands of executives with financial reporting responsibilities use the Comperio on-line library to access the type of information and interpretive guidance PricewaterhouseCoopers' own professional audit staff use around the world. Key content areas include guidance from the FASB, EITF, PCAOB, SEC, and others as well as PwC's interpretive guidance. Get more information and sign up for a complimentary 30-day trial.


These reports and disclosures indicate that some issuers’ actual practices in granting options might not have been consistent with the manner in which these transactions were initially recorded and disclosed. Some issuers have announced restatements of previously issued financial statements as a result of these practices. In addition, some of these practices could result in legal and other contingencies that may require recognition of additional expense or disclosure in financial statements.

The alert advises auditors that these practices may have implications for audits of financial statements or of internal control over financial reporting and discusses factors that may be relevant in assessing the risks related to these matters. The alert advises auditors to “acquire sufficient information to allow him or her to assess the nature and potential magnitude of these risks.”

Practice alerts will generally be prepared by the PCAOB’s Office of Research and Analysis, working in conjunction with the PCAOB’s Office of the Chief Auditor. They will highlight new, emerging or otherwise noteworthy circumstances that may affect how auditors conduct audits under the existing requirements of PCAOB standards and relevant laws.

Audit Practice Alerts will be posted to the Board’s web site at www.pcaobus.org. In addition, to increase the likelihood of affecting audit practices in a timely manner, the staff will also transmit Audit Practice Alerts to registered public accounting firms by e-mail whenever possible.

You may like these other stories...

Although decreasing, the number of audit deficiencies attributed to fair value measurement and impairment engagements continues to be significant, according to the results of a new survey from Atlanta-based CPA firm Acuitas...
The Public Company Accounting Oversight Board (PCAOB) on Monday reminded auditors that they should continue adhering to the board’s existing standards when considering an organization’s ability to operate as a...
Public Company Accounting Oversight Board (PCAOB) inspectors are finding “significant audit deficiencies” in the area of revenue, the US audit watchdog stated in a staff audit practice alert issued on Tuesday.The...

Already a member? log in here.

Upcoming CPE Webinars

Oct 21Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience’s communication style.
Oct 22This webinar will include discussions of important issues in AU-C 800, Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks.
Oct 23Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.
Oct 30Many Excel users have a love-hate relationship with workbook links.