As promised by Public Company Accounting Oversight Board Chair William Duhnke at December’s Center for the Public Trust (CPT)/Baruch Conference, the PCAOB has issued a concept release on its quality control standards to reflect relevant developments affecting audit and assurance practices and firms’ quality control systems. NASBA’s Regulatory Response Committee, chaired by W. Michael Fritz (OH), is studying the document to make recommendations to NASBA Chair Laurie J. Tish and President Ken L. Bishop for NASBA’s response.
The PCAOB explained it is discussing using the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Quality Management 1 (ISQM 1) “as a starting point for a future PCAOB QC standard. Information gathered through our oversight, outreach, and research activities persuades us that our QC standard should be built on an integrated risk-based framework, as Proposed ISQM 1 is.” The PCAOB stated that “it would not be practical to require firms to comply with fundamentally different QC standards.”
The concept document asks respondents to identify potential reasons for differences with ISQM 1 that the PCAOB should consider. Many issues need to be determined, as the concept document poses 58 questions for respondents to address.
The Ethics Committee, chaired by Catherine Allen (NY), is working with the Regulatory Response Committee on developing comments on the Security and Exchange Commission’s amendments to Rule 2-01, Qualifications of Accountants. The SEC explains: “The proposed amendments would update select aspects of the nearly two-decade-old auditor independence rule set to more effectively structure the independence rules and analysis so that relationships and services that would not pose threats to an auditor’s objectivity and impartiality do not trigger non-substantive rule breaches or potentially time consuming audit committee review of non-substantive matters.”
Other exposure drafts now under consideration by the NASBA committees are: AICPA Professional Ethics Division’s Strategy and Work Plan, International Ethics Standards Board Proposed Revisions to the Non-Assurance Services Provisions of the Code, IESBA Proposed Revisions to the Fee-Related Provisions of the Code, and AICPA Maintaining the Relevance of the Uniform CPA Examination. NASBA’s submitted comment letters will be posted on www.nasba.org in the “publications” section.
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