TheCorporateCounsel.net

On December 19th, the PCAOB will hold an open meeting to consider proposing a “new” internal control auditing standard which would supercede Auditing Standard #2. This meeting will be held roughly a week after the SEC proposes changes to management’s Section 404 report (as well as take other internal controls-related actions; according to a Bloomberg report yesterday, the SEC may propose giving smaller companies an additional one-year delay).

The PCAOB’s press release lays out a framework for the new standard that is consistent with what PCAOB Chairman Mark Olson and Chief Auditor Tom Ray have laid out in recent speeches: five goals and a series of sub-points, including the following listed in FEI’s “Section 404” Blog:

1. Focus the internal control audit on most important matters [note: the press release used the term “important” in number 1, not “material” (although “material is used elsewhere) – it will be interesting to see if “important” is the term d’art used in the proposed standard]

2. Eliminate procedures that are unnecessary to achieve the intended benefits (including: permit [i.e., eliminate prohibition on] use of prior years work by auditors, and “require auditors to consider whether and how to use the work of others, instead of doing certain procedures themselves)

3. Incorporate guidance on efficiency – e.g. PCAOB’s May 2005 “guidance,” other guidance issued by the PCAOB to make implementation of the internal control audit standard (originally issued as AS2) more efficient and effective – directly into the new audit standard itself

4. Provide explicit and practical guidance on scaling the audit to fit the size and complexity of the company

5. A simplified standard – propose a “simplified” standard (vs. AS2) that is shorter, easier to understand, and more clearly scalable to audits of companies of all sizes and complexity, by:

– Reducing granularity

– Redefining key terms

– Clarifying that the auditor’s evaluation of materiality for purposes of an internal control audit is based on the same long-standing principles applicable to financial statement audits

– Consolidating the Board’s standards on using the work of others in internal control audits and in financial statement audits into one new standard, so as to better facilitate integration of the two audits.

Accounting Reform: How the Latest Developments Impact You

Tomorrow, join us for our webcast – “Accounting Reform: How the Latest Developments Impact You” – to hear Linda Griggs of Morgan Lewis and Teresa Iannaconi of KPMG discuss the latest developments in accounting standards, such as tax uncertainties, fair value measurements, pension plan and post-retirement standards and lease accounting – and how even the philosophy of regulation is changing as the FASB moves to a more principles-based framework.

One Stop Shopping?

Anyone out there figure out the best way (or web sites) that allow you to input what you seek and you get an email sent to you when it becomes available? I have found this discussion about how you can set RSS feeds so that you will be notified if a desired item shows up on Craigslist or similar sites, but I swear I have heard about others. Let me know and I will share – me no like going to the stores during the holiday season…

The Latest Private Equity Borrower Developments

In this DealLawyers.com podcast, Patrick Lawler of Chapman & Cutler delves into how private equity funds are borrowing to support their M&A habits, including:

– Has increased borrowing from private equity funds helped fuel the trend of these funds doing M&A?
– What are the latest private equity trends regarding when they borrow?
– What are some of the key issues that private equity borrowers consider in securing financing for their transactions?