October 5, 2017
The Public Company Accounting Oversight Board released a new practice alert to help auditors looking at how clients have implemented the Financial Accounting Standards Board’s new accounting standard on revenue recognition.
The staff audit practice alert covers PCAOB requirements and other considerations, including:
- Transition disclosures and transition adjustments;
- Internal control over financial reporting;
- Fraud risks; and,
"We are publishing this alert to help auditors apply relevant PCAOB requirements in upcoming interim reviews and year-end audits," said Martin Baumann, the PCAOB’s chief auditor and director of professional standards, in a statement. "We have been monitoring implementation of this standard, and we've heard from a number of interested parties, including the PCAOB Standing Advisory Group, that guidance on auditing revenue would be helpful."
The new accounting standard, Revenue from Contracts with Customers, was adopted in May 2014, and will be effective for public companies for annual reporting periods beginning after Dec. 15. It is expected to require significant changes to company processes, and the PCAOB noted that that could “pose heightened risks of material misstatement, including fraud risks.”