Defining Issues 2010 04, Issue 18 - PCAOB Proposes Auditing Standard on Communications with Audit Committees

®Defining Issues KPMG LLPApril 2010, No. 10-18PCAOB Proposes Auditing Standard on Communications with Audit CommitteesThe Public Company Accounting Oversight Board (PCAOB) recently released for 1comment a proposed auditing standard, Communications with Audit Committees. The PCAOB’s primary objectives in proposing a new auditing standard were increasing the relevance and effectiveness of communications between the auditor and the audit committee and emphasizing the importance of effective, two-way communications. Comments on the proposed auditing standard are due by May 28, 2010. The PCAOB said its proposal was influenced by a number of factors including the increased use of risk-based audit methodologies and the emphasis on judgments and estimates in financial reporting. Also, Standing Advisory Group members supported a new standard that would enhance auditor communications with audit committees, 2especially in the areas of disclosures and critical accounting estimates. The proposed auditing standard is expected to strengthen and expand the role of the audit Establishing a Mutual 3committee. Understanding of the Audit 2The PCAOB stated that the proposed auditing standard’s four objectives for the Overview of the Audit Strategy and Timing of the Audit 2 auditor’s communications with the audit committee were:Timely Observations That 1. Explaining the responsibilities of the auditor and establishing a mutual Are Significant and Relevant ...