The AICPA’s Auditing Standards Board (ASB) is working on several standard-setting or research projects, according to its 2023 workplan, which was discussed during a meeting on May 16-17 in Nashville, Tennessee. And many of the projects are tied to the board’s goal to converge its standards—as much as possible—with those of the International Auditing and Assurance Standards Board (IAASB).
While the board aims to publish proposals for comment or finalize standards during a specified quarter, the timing is just best estimates of how each project will progress.
Standard-Setting Projects
A task force has been drafting a proposal to revise attestation standards to conform with quality management audit standards. While an exposure draft was previously planned for June, this is likely to be in the third quarter.
“The ASB plans to vote to issue the proposed amendments for exposure, likely during a special meeting to be held in early August,” Ahava Goldman, an associate director with the Association of International Certified Professional Accountants, noted on May 25. (See AICPA Board is Working on Quality Management Attestation Standards in the May 24, 2023, edition of Accounting & Compliance Alert.)
There are two projects that are under consideration for standard-setting.
The first one is attestation standards related to internal control. The objective of this project is to consider “revisions to the attestation standards to address emerging areas of assurance, including engagements on internal control over matters other than financial reporting,” according to the work plan.
The ASB is currently discussing issues related to the project, and at the moment, it is unknown whether an exposure draft will be issued as next steps will be determined later this year or early next year.
The other active project under consideration is leveraging technology. The goal is to consider “additional guidance or actions that might be taken to further encourage the effective and appropriate use of technology, including data analytics, to enhance audit quality.”
The board is in an early stage on this project as the plan says it will be in information gathering mode throughout 2023.
Monitoring IAASB’s Work
The IAASB is expected to vote on final standards on audits of less complex entities (LCEs) in September.
The AICPA board will be discussing this topic throughout the year with a goal to consider “additional guidance or actions that might be taken to address issues and challenges associated with audits of financial statements of LCEs.”
The ASB is also monitoring IAASB’s work on environmental, social and governance (ESG) and sustainability. The international board is aiming to issue a sustainability assurance framework in June and vote on a final set of standards in the third quarter of 2024.
The U.S. board’s objective is to “identify and prioritize possible actions the ASB should take in addressing assurance on Sustainability/ESG reporting.” The ASB will be discussing these issues through the year, and it might issue an exposure draft in 2024.
At this juncture, the ASB’s Sustainability Task Force “is providing feedback to the IAASB and is considering if any changes would be helpful to ASB attestation standards and guidance,” Goldman noted.
Another project the ASB is monitoring is the IAASB’s work on fraud. The international standard-setter is working to issue a proposal in the fourth quarter of this year with a goal to vote on a final standard in the first quarter of 2025.
The ASB will consider “additional guidance or actions that might be taken to address issues and challenges relating to the identification of fraud in an audit of financial statements.” The board is planning to issue an exposure draft in 2024.
The ASB is monitoring three other projects, but they are on slower track for board action: audit evidence; definition of listed entity and public interest entity (PIE); and going concern.
On these projects, the ASB will be in discussion mode with next steps undetermined.
The IAASB issued an exposure draft on audit evidence in the fourth quarter of 2022 and a final vote is planned for second quarter of 2024.
The ASB’s goal is to “explore whether additional changes are needed to AU-C 500 [Audit Evidence] based on revisions to [IAASB’s] ISA 500.”
The international board currently has a two-track workstream on the definition of listed entity and PIE.
Track 1 is transparency, and the IAASB is expected to vote on a final standard this quarter.
Track 2 is definitions and differential guidelines, and the IAASB will issue an exposure draft in the first quarter of 2024 and vote for a final standard in the fourth quarter of 2024.
The ASB’s objective is to monitor the IAASB’s project and the AICPA’s Professional Ethics Executive Committee’s (PEEC) “related actions, if any, and consider the implications on ASB standards.” (See AICPA Panel to Propose Changes to Definitions of Public Entities in the May 22, 2023, edition of ACA.)
As for going concern, the IAASB issued an exposure draft in the first quarter of this year and is planning to vote for a final standard in the fourth quarter of 2024.
The ASB’s plan is to consider “additional guidance or actions that might be taken to address issues and challenges relating to addressing going concern in an audit of financial statements.”
Monitoring PCAOB’s Standard-Setting Activities
The ASB’s goal is to minimize differences between the AICPA’s and the PCAOB’s standards.
The ASB writes audit standards for private companies while the PCAOB writes standards for auditors of public companies and broker-dealers that are registered with the SEC.
The PCAOB has several standard-setting agendas, some of which are in the proposal phase, including quality control, confirmations and AS 1000 general responsibilities. The PCAOB will also issue a proposal on going concern this year.
This article originally appeared in the May 26, 2023 edition of Accounting & Compliance Alert, available on Checkpoint.
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