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State Board Report

September 2014

The AICPA is seeking input from all stakeholders on a discussion paper entitled “Enhancing Audit Quality: Plans and Perspectives for the U.S. CPA Profession,” released on August 7, 2014. The paper covers the AICPA’s short-term and long-term plans to address quality issues related to financial statement audits of private entities. Among the significant changes included are:

  • Release a rigorous, profession-wide competency framework that has been validated by experts and regulators.
  • Perform more extensive peer review procedures on high-risk and complex areas and engagements.
  • Explore ways in which peer review reporting can better articulate information users find meaningful.
  • Consider sanctions, including admonishment, suspension or expulsion from AICPA membership, when a firm has failed to provide the AICPA Peer Review Program with a complete list of engagements that should be subject to review. The AICPA’s action would be reported to the appropriate regulators.

The Enhancing Audit Quality (EAQ) initiative was launched by the AICPA in May and is to take a two-phased approach. Phase 1 involves efforts to improve quality in the near term and Phase 2 covers transformation of the current peer review program into a practice monitoring process that couples technology with human oversight.

A second paper, covering practice monitoring of the future, is to be issued by the AICPA in the fall, as was announced at the NASBA Regional Meetings by AICPA Senior Vice President Susan S. Coffey.

Twenty-nine questions are posed in the current EAQ discussion paper and feedback is requested by November 7, 2014. NASBA will be commenting on the paper.

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