Audit News Briefing: 28 June 2016

Audit-is-cool is pleased to accumulate and provide its readers with the news on audit and related topics:

June 27, 2016

AccountingWeb.com

Internal Controls Over Information Technology at Your Firm

American Institute of CPA awardee for Information Management & Technology Assurance, Sundeep Bablani wrote: “… enhancements in technology have significantly changed the outlook of evaluating controls from an auditor’s perspective.” This is about organizations’ reliance on manual controls in identifying unusual transactions. He explained the ‘integrated audit technique’ and emphasized on the necessity to conduct frequent IT audit evaluations in view of constant change in technology.

“Controls over technology have a direct impact on the overall reliability of financial statements regardless of the size of the organization. Financial auditors are therefore required to obtain a general understanding of information technology (IT) controls as part of their audits.”

Please follow link for details: http://www.accountingweb.com/technology/trends/internal-controls-over-information-technology-at-your-firm

June 24, 2016

AccountingToday.com

Will the Brexit Break E.U. Audit Firm Rotation?

Editor-in-chief Michael Cohn explained the impact of timing – when U.K. voted to “Brexit” from the E.U. only a week before the effectivity of the new rules for mandatory audit firm rotation.

His opinion states: “It’s probably too soon to say for sure. The mandatory audit firm provisions are only part of a wide-ranging set of audit market reforms now mandated in the E.U. They aim to force large public companies to tender requests for new audit firms at least every 10 years and to actually rotate audit firms at least every 20 years.”

He also disclosed a recent statistical finding by Ernst & Young that – One out of five large companies in the United Kingdom is “woefully unprepared” for the new EU rules on audit firm rotation.

Please follow link for details: http://www.accountingtoday.com/blogs/debits-credits/news/will-the-brexit-break-eu-audit-firm-rotation-78506-1.html

June 14, 2016

Economia.ICAEW.com

Big Four will take in each other's dirty washing under new audit law, says Lord Hodgson

Pointing out concerns regarding the effect of the new regulation – The Statutory Auditors and Third Country Auditors Regulations 2016 (effective 17 June 2016), Lord Hodgson of Astley Abbots lobby for joint auditing: “The challenge to the government and the profession is: how do you achieve break-in to the magic circle? One way would be to encourage joint auditing.”

He raised lack of competition in the audit market – an issue that the new regulation failed to resolve: “These regulations are the produce of tired thinking. It is a shame that the profession and its regulators have not been able to think more creatively about the real issues and, instead, have fallen back on the old policy of, ‘If in doubt, stick in another regulation’.”

Please follow link for details: http://economia.icaew.com/news/june-2016/big-four-will-take-in-each-others-dirty-washing-under-new-audit-law

June 8, 2016

The Wall Street Journal

WSJ: Top 10 Audit Firms Now Audit 61% of SEC Registrants

Based on the recent data released by the Audit Analytics research provider, CFO Journal’s Senior Editor Maxwell Murphy marked the observation that audit work is now concentrated among fewer accounting firms. The reason – top 10 U.S. accounting firms have stepped up the share of corporate books they oversee.

·         3.8% increase from 2015 – top firms audit 60.7% of nearly 7,000 firms and funds under SEC audit regulation.

·         Global Six audit 96.8% of large multinational accounts of companies categorized as “accelerated filers”. The Big Four handle almost 91% of these audit work.

·         Global six also captured 2/3 or more of smaller accelerated filers and non-accelerated filers.

Please follow link for details: http://blogs.wsj.com/cfo/2016/06/08/top-10-audit-firms-now-audit-61-of-sec-registrants-2/