Andrew Cleve’s Post

Third party confirms are an efficient and (almost) always a trustworthy step in the audit process. At the same time, they have been responsible for misstatements and omissions since Bernie Madoff and long before. A modernized standard is a welcome update. #PCAOB #GAAS #securitiesregulation #ICFR

The new standard will take effect for audits of financial statements for fiscal years ending on or after June 15, 2025; and thus, giving independent public accounting firms that opportunity to update audit methodologies and testing approach/procedures. Among its key provisions, the new standard: * Includes a new requirement regarding confirming cash and cash equivalents held by third parties or otherwise obtaining relevant and reliable audit evidence by directly accessing information maintained by a knowledgeable external source; * Carries forward the existing requirement regarding confirming accounts receivable, while addressing situations where it is not feasible for the auditor to perform confirmation procedures or otherwise obtain relevant and reliable audit evidence for accounts receivable by directly accessing information maintained by a knowledgeable external source; * States that the use of negative confirmation requests alone does not provide sufficient appropriate audit evidence; * Emphasizes the auditor's responsibility to maintain control over the confirmation processes and provides that the auditor is responsible for selecting the items to be confirmed, sending confirmation requests, and receiving confirmation responses; and * Identifies situations in which alternative procedures should be performed by the auditor.

The Public Company Accounting Oversight Board (PCAOB) just replaced AS 2310, the standard that addresses the auditor's use of confirmations, "to strengthen and modernize the requirements for the confirmation process." Read more at the link below. #PCAOB #AS2310 #Confirmations #Standards #PCAOBStandards #PKFSanDiego #Audit #Tax #Accounting