September 17, 2014

PCAOB Staff Practice Alert: Revenue Auditing

Recently, the PCAOB issued “Staff Audit Practice Alert No. 12” about auditing revenue, including revenue recognition, presentation and disclosure. The Alert cited “frequently observed significant audit deficiencies” regarding revenues during auditor inspections of audit firms – and focuses on these areas:

– Testing the recognition of revenue from contractual arrangements
– Evaluating the presentation of revenue—gross versus net revenue
– Testing whether revenue was recognized in the correct period
– Evaluating whether the financial statements include the required disclosures regarding revenue
– Responding to risks of material misstatement due to fraud associated with revenue
– Testing and evaluating controls over revenue
– Applying audit sampling procedures to test revenue
– Performing substantive analytical procedures to test revenue
– Testing revenue in companies with multiple locations

Here’s more from the FEI Daily.

In our “Audit Committee” Practice Area, we have numerous resources – including a bunch of sample documents (eg. Memo to Audit Committee: What Certification Procedures Are).

PCAOB Inspection: E&Y’s 49% Audit Deficiency Rate!

As highlighted in this WSJ article, the most recent inspection of E&Y’s audits by the PCAOB found a 49% deficiency rate. 49%! I’m speechless…

Craig Eastland has blogged a 3-part series about restatements, including statistics and a flow chart. Check it out!

Mailed: September-October Issue of The Corporate Executive

The September-October issue of The Corporate Executive was recently mailed to subscribers. This issue includes important practical guidance on:

– Company Postpones its Annual Meeting Due to Lawsuit Over Stock Plan and Disclosures
– Lawsuits Against Non-Employee Directors Over Their Own Compensation Increase—And Why They Are Easier to Bring
– Formal Relief from Section 457A for Stock Options and Stock SARs
– Section 409B—Worse Than 409A?

Act Now: Get the “Rest of 2014 for Free” when you try a ’15 No-Risk Trial now.

– Broc Romanek