December 2, 2011
We are pleased to send you ParenteBeard's weekly audit and accounting e-alert. It is our intention to deliver you the most up-to-date, relevant and technical accounting and audit-related information to assist you in your business and personal needs. We hope you find this e-alert informative.
FASB Summarizes Consolidation Proposal
The FASB has issued its In Focus publication, “FASB Issues Proposed Improvements to Consolidation Accounting.” This publication discusses the proposed changes to the accounting guidance when companies are required to evaluate whether they should consolidate another entity. The proposed Accounting Standards Update (ASU), Consolidation (Topic 810): Principal versus Agent Analysis, was issued by the FASB on November 3, 2011. Comments on the proposal are due January 17, 2012.
The FASB’s In Focus publication is available here.
PCAOB Approves Budget and Related Strategic Plan
The PCAOB has approved its 2011-2015 Strategic Plan and 2012 fiscal-year budget of approximately $227.7 million. The budget is $23.3 million, or 11.4%, above the PCAOB's 2011 budget of $204.4 million.
The PCAOB approved its strategic plan for 2011-2015 to serve as the foundation for the 2012 budget, as required by the SEC's PCAOB budget rule. The 2012 budget is subject to approval by the SEC.
The PCAOB news release is available here.
PCAOB Announces SAG Members
The PCAOB has announced 28 new and re-appointed members to its Standing Advisory Group (SAG). The PCAOB has also expanded the size of the advisory group and increased SAG members' terms from two years to three years, bringing the total SAG membership to 42.
The SAG includes experts in the fields of accounting, auditing, financial reporting, corporate finance, and corporate governance, as well as experts in investing in public companies. Initially, individual SAG terms will be staggered to allow a greater continuity of membership. Of the new and reappointed members, 14 members will serve two-year terms, beginning in January 2012, and the remaining 14 members will serve three-year terms, beginning on the same date.
The PCAOB new release along with a complete list of SAG members is available here.
European Commission Proposes Audit Changes
The European Commission (EC) has proposed extensive regulations that would, if approved, trigger major changes in the relationships between European public companies and their auditors.
The changes include the following items:
- Audit firms would be required to rotate after a maximum engagement period of six years. A “cooling off” period of four years would be applicable before the audit firm could be engaged again by the same client. The period before which rotation is obligatory can be extended to nine years if joint audits are performed (i.e., if the entity being audited appoints more than one audit firm to carry out its audit).
- Audit firms would be prohibited from providing non-audit consultancy services to their audit clients, and large audit firms would be required to separate audit activities from non-audit activities.
- Public-interest entities would be required to have an “open and transparent tender procedure” when picking a new auditor.
- A single market for statutory audits would be created by introducing a European passport for the audit profession, allowing firms to provide services across the European Union.
The EC has issued a supporting document, “Reforming the Audit Market - Frequently Asked Questions,” that elaborates on the above proposals.
A press release issued by the EC describing the above proposals is available here.
The document, “Reforming the Audit Market - Frequently Asked Questions,” is available here.
Our strategic partnership with CCH, a Wolters Kluwer business, has enabled us to craft our Audit & Accounting eAlert. The articles have been selected from CCH’s Accounting Research Manager Daily and/or Weekly Summary and we hope you find them valuable and relevant. Please feel free to contact ParenteBeard LLC at info@ParenteBeard.com if you have any questions related to these stories or ParenteBeard's services.
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