AICPA Technical Practice Aids [Subscription]

This publication contains all outstanding AICPA Statements of Position Practice Bulletins and Practice Alerts. In addition, this useful reference presents a nonauthoritative section that offers carefully thought-out responses to selected inquiries received by the AICPA Technical Hotline and AICPA Technical and Industry Committees.

CD-ROM Subscription > reSOURCE: AICPA's Accounting and Auditing Literature on CD-ROM
Your 1-year subscription includes up to three update discs. Multi-user subscriptions are available for this title; please call 888-777-7077 for more information.

Online Subscription > AICPA RESOURCE: Accounting & Auditing Literature
Your subscription includes monthly content updates and unlimited online access for 1 year. AICPA RESOURCE: Accounting & Auditing Literature - your core accounting and auditing library online - is now customizable to suit your preferences, or your organization's needs. Click here for more information. Multi-user subscriptions are available for this title; please call 888-777-7077 for more information.

AICPA Technical Practice Aids

.01 STAFF QUESTIONS AND ANSWERS

AUDITING INTERNAL CONTROL OVER FINANCIAL REPORTING

JUNE 23, 2004 (Revised July 27, 2004) fn 1

Summary:

Staff questions and answers set forth the staff's opinions on issues related to the implementation of the standards of the Public Company Accounting Oversight Board ("PCAOB" or "Board"). The staff publishes questions and answers to help auditors implement, and the Board's staff administer, the Board's standards. The statements contained in the staff questions and answers are not rules of the Board, nor have they been approved by the Board.

The following staff questions and answers related to PCAOB Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements ("Auditing Standard No. 2"), were prepared by the Office of the Chief Auditor. Questions should be directed to Laura Phillips, Associate Chief Auditor (202/207-9111; phillipsl@pcaobus.org) or Greg Fletcher, Assistant Chief Auditor (202/207-9203; fletcherg@pcaobus.org).

* * *

General

Q1.

What is the authoritative status of the Background and Basis for Conclusions appendix in a Board's standard?

A1.

All appendices of auditing standards issued by the Board, including the Background and Basis for Conclusions, are an integral part of the standard and carry the same authoritative weight as the body of the standard.

Q2.

What is the authoritative status of the Notes included within the body of a Board’s standard?

A2.

Both the Notes and footnotes to a Board standard are an integral part of the standard and carry the same authoritative weight as any other information in the body of, or appendices to, the standard.

Independence

Q3.

Paragraph 33 of Auditing Standard No. 2 states: “The auditor must not accept an engagement to provide internal control-related services to an issuer for which the auditor also audits the financial statements unless that engagement has been specifically pre-approved by the audit committee." Although the word "non-audit" does not appear in that requirement, do only non-audit internal control-related services need to be specifically pre-approved?

A3.

The pre-approval requirement in Auditing Standard No. 2 applies to any internal control-related services, regardless of whether they are classified as audit or non-audit services for proxy disclosure purposes or otherwise. Every proposed engagement by the issuer's auditor to provide internal control-related services merits specific attention by the audit committee so that the audit committee can determine whether the performance of the services would impair the auditor's independence and whether management's involvement in the services is substantive and extensive.

Copyright © American Institute of Certified Public Accountants, Inc. All Rights Reserved

January 2007