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Issuers of public company financial statements are governed by:
Issuers of public company financial statements are governed by the Securities Exchange Commission under audit standards as promulgated by the PCAOB.
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The following roles fall under the FROR:
The Financial Reporting Oversight Role as defined by Rule 3501 of the PCAOB: “The term "financial reporting oversight role" means a role in which a person is in a position to or does exercise influence over the contents of the financial statements or anyone who prepares them, such as when the person is a member of the board of directors or similar management or governing body, chief executive officer, president, chief financial officer, chief operating officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent position.”
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John Rich is a CPA auditor with Biggs, CPA. Rich is an avid investor and has a rather larger portfolio. Rich has a 6% stake in Sigma Corp a public company client of Biggs. Rich is not on the Sigma account but notified the partners of his investment. Because of Rich’s investment:
Under this scenario, independence is impaired when according to PCAOB ET 101 “During the period of the professional engagement, a partner or professional employee of the firm, his or her immediate family, or any group of such persons acting together owned more than 5 percent of a client’s outstanding equity securities or other ownership interests.”
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An auditor of a non-issuer must conduct the audit in accordance with A) ASB Standards B) PCAOB Standards
An auditor of a non-issuer must conduct the audit in accordance with ASB Standards.
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Of the following, which provides the most authoritative guidance for an audit of an issuer?
General guidance by the PCAOB is the most authoritative level of auditing guidance for audits of issuers.
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An auditor has been prevented from conducting full due diligence and proper audit procedures for the engagement of a company. He does not feel that he has examined enough evidence and is deciding how to issue an opinion. Which should be his choice?
The auditor cannot issue a positive or negative opinion, simply disclaiming the opinion since he was unable to determine anything about the company.
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