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...

While audits of broker-dealers showed some improvement last year compared to previous years, 71 of 90 broker-dealer audits inspected by the Public Company Accounting Oversight Board (PCAOB) in 2013 were still found to have...
The Public Company Accounting Oversight Board (PCAOB) and the Danish Business Authority (DBA) entered into a cooperative arrangement on July 18 that gives both regulators oversight of audit firms in their respective...
Staff guidance released by the Public Company Accounting Oversight Board (PCAOB) on Thursday will assist auditors of brokers and dealers registered with the US Securities and Exchange Commission (SEC) plan and perform audits...

Already a member? log in here.

Upcoming CPE Webinars

Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.