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Dec. 9 — No new standard is moved from the research agenda to the standard- setting agenda unless is has passed a rigorous cost-benefit analysis by the PCAOB’s Center for Economic Analysis.
The research agenda, Martin Baumann, PCAOB’s chief auditor and standard-setting director, said is a “disciplined” way for the board to consider the best, most cost-efficient way to solve problems of audit integrity.
The first choice is to assess whether a less costly alternative to rulemaking, like a Staff Practice Alert or other guidance, would be the best way to proceed. Only after that is rejected, then the audit problem will advance to the standard-setting agenda.
Baumann made his comments Dec. 7 at the American Institute of CPAs’ session on Public Company Accounting Oversight Board standards.
Baumann said the board was monitoring companies use of non-GAAP (generally accepted accounting principles) financial performance measures and how auditors treat them.
Currently firms are required to read and consider “other information” under the AU 550 standard. There is no obligation to evaluate “other information” by means of audit procedures used for non-GAAP measures.
The existing standard—AU 550—requires auditors only to “read and consider” other information, while the reworked proposed model standard expands the auditor’s responsibilities and accountability by:
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