Audit tips from PCAOB inspections leader
Jan. 4, 2023
At last month's AICPA & CIMA Conference on Current SEC and PCAOB Developments, the director of the PCAOB's Division of Registration and Inspections offered a pep talk of sorts to public company auditors, along with some New Year's resolutions.
"The role of the financial statement auditor and the auditing profession continues to be a noble endeavor that has never been more needed and vital to our economic stability and the well-being of our capital markets," said George Botic, CPA. "Like oxygen, audit quality may not be fully appreciated when it is present, but I think you can definitely tell when it's missing."
A former auditor himself, Botic makes a living assessing when something is missing in an auditor's work. At the conference, he offered some areas of focus for 2023 PCAOB inspections.
Botic said the PCAOB will continue to take a close look at audits of special-purpose acquisition companies (SPACs) and de-SPAC transactions. More generally, PCAOB inspections will pay particular attention to the robustness of an auditor's risk assessment as well as auditor independence.
"We will continue to select financial statement focus areas that are generally more complex, require significant judgment, and may be particularly susceptible to change," Botic said.
In addition, Botic offered five key takeaways for auditors to carry with them every day on the job:
- Exercise professional skepticism.
- Focus on fraud procedures.
- Ensure review and supervision of the audit.
- Get back to the basics of audit work.
- Focus on CAMs (critical audit matters).
"The most important thing an auditor can bring to an audit is an attitude that includes a questioning mind for a critical assessment of evidence," Botic said. "It is important to stress this with less-experienced staff who may have been working entirely remotely since they joined the firm. I encourage firm leadership to embrace and promote a culture of 'I've got your back' to ensure that engagement teams feel empowered to maintain a questioning mind and push back when warranted."
[Journal of Accountancy]