05 December 2008

PCAOB issues staff audit practice alert on audit considerations in the current environment

The Boards staff alert outlines potential areas of heightened audit risk which include issues such as fair value measurement, the adequacy of disclosures, and accounting estimates. It is designed to assist auditors in identifying matters related to the current economic environment that might affect audit risk and require additional emphasis in audits of financial statements and audits of internal control over financial reporting.

“This alert is intended to highlight special auditing challenges and risks posed by the current economic environment, including fraud risk, as auditors gear up to complete their year-end auditing for 2008 and for as long as current conditions persist," said Tom Ray, Chief Auditor and Director of Professional Standards.

The Staff Audit Practice Alert discusses the following six matters:

Ø       Overall audit considerations

Ø       Auditing fair value measurements

Ø       Auditing accounting estimates

Ø       Auditing the adequacy of disclosures

Ø       Auditor’s consideration of a company’s ability to continue as a going concern

Ø       Additional audit considerations for selected reporting areas

Staff Audit Practice Report

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