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The Public Company Accounting Oversight Board PCAOB proposed major changes to the auditors reporting model for the first time in more than 70 years in August 2013 It would prevent occurrences of the fraud activities and future accounting scandals The most significant new requirements of the PCAOB are a report on critical audit matters and a tenure disclosure These two changes would increase the value and relevance of the information in the auditors report and expand the auditors responsibilities for information outside in the financial statements Zietsman 2013 Although audit firms have expressed many concerns regarding this new proposal eventually it would bring positive effects for both auditors and investors and users with PCAOBs new proposal Critical Audit MattersAccording to PCAOB AU Section 110 the auditors current role is reviewing and providing opinions about a companys financial statement independently and verifying whether the financial statements are free of material misstatements The proposed changes alter this role to require auditors to communicate their findings about critical audit matters and discuss issues that posed difficulty during audits Tysiac 2013 Under the PCAOB proposal accounting firms will have to disclose to investors the most difficult and subjective judgments they make when performing their audits Alloway 2013 Expanding the scope of the auditors report in this manner would be very helpful to investors and users in making their investment decisions as it would increase the amount and type of information they receive Traditionally the auditor examining the financial statements makes a pass-fail determination based on whether the material the financial position and cash flow statements comply with Generally Accepted Accounting Principles GAAP Keeler 2013 Investors and users have pointed out that the auditors report is not essential enough because the information it provides is not specific enough The report would be more useful if the auditors were to provide more relevant informationAuditor TenureAnother part of the PCAOBs proposal is about tenure disclosure it stipulates that the audit firm
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