This article summarizes “Tracking Tangible Asset Ownership and Provenance with Blockchain” (Sheldon 2022), which introduces auditors to the risks of using blockchain’s shared repository to track assets in the physical world. The underlying challenge is keeping the status of tangible assets aligned with their digital representations on a blockchain. In response, the summary focuses on the parties, technologies, and processes that make this task complex. The summary begins with an overview of how blockchain can be used to track tangible assets, then discusses four stages of tracking tangible assets with blockchain: (1) design and governance of a blockchain, (2) asset creation, (3) asset transfer, and (4) asset retirement. Based on the risks highlighted in these four stages, the summary presents a framework of risk considerations and control objectives that auditors can use to evaluate the extent to which a blockchain serves as a reliable repository for tracking tangible assets.
{"title":"Preparing Auditors to Evaluate Blockchains Used to Track Tangible Assets","authors":"Mark D. Sheldon","doi":"10.2308/ciia-2023-014","DOIUrl":"https://doi.org/10.2308/ciia-2023-014","url":null,"abstract":"\u0000 This article summarizes “Tracking Tangible Asset Ownership and Provenance with Blockchain” (Sheldon 2022), which introduces auditors to the risks of using blockchain’s shared repository to track assets in the physical world. The underlying challenge is keeping the status of tangible assets aligned with their digital representations on a blockchain. In response, the summary focuses on the parties, technologies, and processes that make this task complex. The summary begins with an overview of how blockchain can be used to track tangible assets, then discusses four stages of tracking tangible assets with blockchain: (1) design and governance of a blockchain, (2) asset creation, (3) asset transfer, and (4) asset retirement. Based on the risks highlighted in these four stages, the summary presents a framework of risk considerations and control objectives that auditors can use to evaluate the extent to which a blockchain serves as a reliable repository for tracking tangible assets.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":"60 9","pages":""},"PeriodicalIF":0.8,"publicationDate":"2023-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138626526","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Colleen M. Boland, Dana R. Hermanson, Julia L. Higgs, Jonathan S. Pyzoha, Yibo Zhang
SUMMARY On June 26, 2023, the Public Company Accounting Oversight Board (the Board or PCAOB) issued a request for comment on its Proposed Amendments Related to Aspects of Designing and Performing Audit Procedures That Involve Technology-Assisted Analysis of Information in Electronic Form (Public Company Accounting Oversight Board (PCAOB) 2023a). This commentary summarizes the participating committee members’ views on the proposal. We first provide answers to specific questions posed in the release, viewing the issuance of a new standard as a given. Subsequently, we also examine how well the proposal’s economic analysis establishes a solid foundation for new standard setting.
{"title":"Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the PCAOB’s <i>Proposed Amendments Related to Aspects of Designing and Performing Audit Procedures That Involve Technology-Assisted Analysis of Information in Electronic Form</i>","authors":"Colleen M. Boland, Dana R. Hermanson, Julia L. Higgs, Jonathan S. Pyzoha, Yibo Zhang","doi":"10.2308/ciia-2023-019","DOIUrl":"https://doi.org/10.2308/ciia-2023-019","url":null,"abstract":"SUMMARY On June 26, 2023, the Public Company Accounting Oversight Board (the Board or PCAOB) issued a request for comment on its Proposed Amendments Related to Aspects of Designing and Performing Audit Procedures That Involve Technology-Assisted Analysis of Information in Electronic Form (Public Company Accounting Oversight Board (PCAOB) 2023a). This commentary summarizes the participating committee members’ views on the proposal. We first provide answers to specific questions posed in the release, viewing the issuance of a new standard as a given. Subsequently, we also examine how well the proposal’s economic analysis establishes a solid foundation for new standard setting.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":"126 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135962831","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Colleen M. Boland, Dana R. Hermanson, Julia L. Higgs, Kyleen W. Prewett, , Jonathan S. Pyzoha, Amy C. Tegeler
SUMMARY On June 6, 2023, the Public Company Accounting Oversight Board (the Board or PCAOB) issued a request for comment on its Amendments to PCAOB Auditing Standards Related to a Company’s Noncompliance with Laws and Regulations and Other Related Amendments (Public Company Accounting Oversight Board (PCAOB) 2023b). This commentary summarizes the participating committee members’ views on the proposal. Based on our consideration of the issues, we do not support the proposal, due to a number of fundamental concerns.
{"title":"Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the PCAOB’s <i>Amendments to PCAOB Auditing Standards Related to a Company’s Noncompliance with Laws and Regulations and Other Related Amendments</i>","authors":"Colleen M. Boland, Dana R. Hermanson, Julia L. Higgs, Kyleen W. Prewett, , Jonathan S. Pyzoha, Amy C. Tegeler","doi":"10.2308/ciia-2023-016","DOIUrl":"https://doi.org/10.2308/ciia-2023-016","url":null,"abstract":"SUMMARY On June 6, 2023, the Public Company Accounting Oversight Board (the Board or PCAOB) issued a request for comment on its Amendments to PCAOB Auditing Standards Related to a Company’s Noncompliance with Laws and Regulations and Other Related Amendments (Public Company Accounting Oversight Board (PCAOB) 2023b). This commentary summarizes the participating committee members’ views on the proposal. Based on our consideration of the issues, we do not support the proposal, due to a number of fundamental concerns.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135663732","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article summarizes and reflects on the practical implications of the published study “Are Referred-To Auditors Associated with Lower Quality and Efficiency?” (Krishnan and Li 2023). Audits of companies frequently involve the participation of auditors (who audit components of clients) other than the lead auditor that signs the audit report. In general, the work of these component auditors is assimilated in the lead auditor’s report. However, uniquely in the United States, the lead auditor sometimes formally divides responsibility with the component auditor and refers to the component auditor’s work in its audit report. These component auditors are “referred-to” auditors. Krishnan and Li (2023) examine factors associated with the use of referred-to auditors as well as the associations between the use of referred-to auditors and measures of audit quality and audit efficiency.
本文总结并反思了已发表的研究“推荐审计师与低质量和效率相关吗?”(Krishnan and Li 2023)。公司的审计经常涉及审核员(审计客户的组成部分)的参与，而不是签署审计报告的首席审核员。一般来说，这些组成部分的审计员的工作都包含在主审计员的报告中。然而，独特的是，在美国，主审计师有时会与组成审计师正式划分责任，并在其审计报告中提及组成审计师的工作。这些组件审计员是“引用”审计员。Krishnan和Li(2023)研究了与使用参考审计师相关的因素，以及参考审计师的使用与审计质量和审计效率的度量之间的关联。
{"title":"Implications of Divided Responsibility in Audits Involving Component Auditors","authors":"Tom Adams, Jayanthi Krishnan, Mengtian Li","doi":"10.2308/ciia-2023-007","DOIUrl":"https://doi.org/10.2308/ciia-2023-007","url":null,"abstract":"\u0000 This article summarizes and reflects on the practical implications of the published study “Are Referred-To Auditors Associated with Lower Quality and Efficiency?” (Krishnan and Li 2023). Audits of companies frequently involve the participation of auditors (who audit components of clients) other than the lead auditor that signs the audit report. In general, the work of these component auditors is assimilated in the lead auditor’s report. However, uniquely in the United States, the lead auditor sometimes formally divides responsibility with the component auditor and refers to the component auditor’s work in its audit report. These component auditors are “referred-to” auditors. Krishnan and Li (2023) examine factors associated with the use of referred-to auditors as well as the associations between the use of referred-to auditors and measures of audit quality and audit efficiency.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":"1 1","pages":""},"PeriodicalIF":0.8,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42302372","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-01DOI: 10.2308/1936-1270-17.2.i
{"title":"Covers and Front Matter","authors":"","doi":"10.2308/1936-1270-17.2.i","DOIUrl":"https://doi.org/10.2308/1936-1270-17.2.i","url":null,"abstract":"","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135588960","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article provides a summary of recent research by Bratten, Causholli, and Sulcaj (2022), who examine whether issuers with audit committees who report strong oversight over the audit function have higher audit quality. Using a novel dataset from Audit Analytics that summarizes reported audit committee activities, Bratten et al. (2022) create a composite measure that captures the strength of the audit committee’s oversight of the audit process. The study uses several measures to capture audit quality, including audit fees, discretionary accruals, and propensity to meet or just beat earnings benchmarks. The authors show that, when issuers’ audit committees report activities consistent with being more active in overseeing the external auditor, issuers, on average, have better audit quality.
{"title":"Is Audit Quality Higher When Audit Committees Report Strong Oversight?","authors":"B. Bratten, Monika Causholli, Valbona Sulcaj","doi":"10.2308/ciia-2022-041","DOIUrl":"https://doi.org/10.2308/ciia-2022-041","url":null,"abstract":"\u0000 This article provides a summary of recent research by Bratten, Causholli, and Sulcaj (2022), who examine whether issuers with audit committees who report strong oversight over the audit function have higher audit quality. Using a novel dataset from Audit Analytics that summarizes reported audit committee activities, Bratten et al. (2022) create a composite measure that captures the strength of the audit committee’s oversight of the audit process. The study uses several measures to capture audit quality, including audit fees, discretionary accruals, and propensity to meet or just beat earnings benchmarks. The authors show that, when issuers’ audit committees report activities consistent with being more active in overseeing the external auditor, issuers, on average, have better audit quality.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2023-08-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42516955","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Prior research shows that many of the companies that disclose material weaknesses in internal control (MWs) do not disclose such weaknesses in earlier quarterly 10-Q filings for the same year—i.e., the year-end MW disclosures are “surprise” disclosures. We find that shareholders at accelerated filers with surprise MW disclosures are more likely to vote against auditor ratification (by a factor of about 1.4 times) than at companies with “no-surprise” MW disclosures. These findings suggest that shareholders may at least partly blame auditors and hold them responsible for the surprise MW disclosures. Internal control disclosures necessarily involve professional judgment, but the results indicate that for shareholders, earlier disclosure of such problems is preferable to waiting until the year-end (and perhaps hoping that the problems will be resolved).
{"title":"Do Shareholders Care about “Surprise” Internal Control Weakness Disclosures?","authors":"H. Belina, K. Raghunandan, D. Rama","doi":"10.2308/ciia-2023-002","DOIUrl":"https://doi.org/10.2308/ciia-2023-002","url":null,"abstract":"\u0000 Prior research shows that many of the companies that disclose material weaknesses in internal control (MWs) do not disclose such weaknesses in earlier quarterly 10-Q filings for the same year—i.e., the year-end MW disclosures are “surprise” disclosures. We find that shareholders at accelerated filers with surprise MW disclosures are more likely to vote against auditor ratification (by a factor of about 1.4 times) than at companies with “no-surprise” MW disclosures. These findings suggest that shareholders may at least partly blame auditors and hold them responsible for the surprise MW disclosures. Internal control disclosures necessarily involve professional judgment, but the results indicate that for shareholders, earlier disclosure of such problems is preferable to waiting until the year-end (and perhaps hoping that the problems will be resolved).","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2023-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45289126","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Companies are increasingly reporting and assuring sustainability information. Once the decision to assure is made, a company must choose an assurance provider, but should the company use the same firm as its financial statement auditor or a different assurance provider? Lu, Simnett, and Zhou (2023) find that perceived independence concerns deter companies from choosing the same provider, while a provider’s assurance expertise and higher levels of information integration between the financial statements and the extended external report both increase the likelihood of using the same provider. Companies using the same provider for both services benefit from higher financial statement audit quality without paying significantly higher audit fees. The findings of this research are useful for companies in deciding whether to employ their financial statement audit firm to also provide assurance of extended external reports. The findings also have implications for auditors and standard-setters/regulators.
{"title":"Should Companies Use the Same Provider for Financial Statement Audit and Assurance of Extended External Reports?","authors":"Meiting Lu, R. Simnett, Shangsi Zhou","doi":"10.2308/ciia-2022-036","DOIUrl":"https://doi.org/10.2308/ciia-2022-036","url":null,"abstract":"\u0000 Companies are increasingly reporting and assuring sustainability information. Once the decision to assure is made, a company must choose an assurance provider, but should the company use the same firm as its financial statement auditor or a different assurance provider? Lu, Simnett, and Zhou (2023) find that perceived independence concerns deter companies from choosing the same provider, while a provider’s assurance expertise and higher levels of information integration between the financial statements and the extended external report both increase the likelihood of using the same provider. Companies using the same provider for both services benefit from higher financial statement audit quality without paying significantly higher audit fees. The findings of this research are useful for companies in deciding whether to employ their financial statement audit firm to also provide assurance of extended external reports. The findings also have implications for auditors and standard-setters/regulators.","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2023-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43926317","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
C. Boland, P. Caster, Randal J. Elder, Diane J. Janvrin
On December 20, 2022, the Public Company Accounting Oversight Board (PCAOB) issued a request for comment on its proposed auditing standard, The Auditor’s Use of Confirmation, and Other Proposed Amendments to PCAOB Standards. The proposed auditing standard describes principles-based requirements that apply to paper-based and electronic confirmations, improves integration with risk assessment standards, requires confirmation for cash held by third parties, and carries over existing requirements regarding confirming accounts receivable. Further, it considers additional audit procedures when using negative confirmation requests and clarifies certain activities where the auditor should not use an internal auditor to provide direct assistance. The proposed standard is important, as the audit confirmation process touches nearly every audit. The comment period ended on February 20, 2023. This commentary summarizes the participating members’ views on the questions posed by the PCAOB. Data Availability: Proposed Auditing Standard—The Auditor’s Use of Confirmation, and Other Proposed Amendments to PCAOB Standards, including questions for respondents, is available at PCAOB Proposes New Standard for the Auditor’s Use of Confirmation | PCAOB (https://pcaobus.org/).
{"title":"Comments by the Ad Hoc Task Force of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the Proposed Auditing Standard, the Auditor’s Use of Confirmation, and Other Proposed Amendments to PCAOB Standards","authors":"C. Boland, P. Caster, Randal J. Elder, Diane J. Janvrin","doi":"10.2308/ciia-2023-006","DOIUrl":"https://doi.org/10.2308/ciia-2023-006","url":null,"abstract":"\u0000 On December 20, 2022, the Public Company Accounting Oversight Board (PCAOB) issued a request for comment on its proposed auditing standard, The Auditor’s Use of Confirmation, and Other Proposed Amendments to PCAOB Standards. The proposed auditing standard describes principles-based requirements that apply to paper-based and electronic confirmations, improves integration with risk assessment standards, requires confirmation for cash held by third parties, and carries over existing requirements regarding confirming accounts receivable. Further, it considers additional audit procedures when using negative confirmation requests and clarifies certain activities where the auditor should not use an internal auditor to provide direct assistance. The proposed standard is important, as the audit confirmation process touches nearly every audit. The comment period ended on February 20, 2023. This commentary summarizes the participating members’ views on the questions posed by the PCAOB.\u0000 Data Availability: Proposed Auditing Standard—The Auditor’s Use of Confirmation, and Other Proposed Amendments to PCAOB Standards, including questions for respondents, is available at PCAOB Proposes New Standard for the Auditor’s Use of Confirmation | PCAOB (https://pcaobus.org/).","PeriodicalId":44019,"journal":{"name":"Current Issues in Auditing","volume":" ","pages":""},"PeriodicalIF":0.8,"publicationDate":"2023-06-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45839353","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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