On December 4, the Center for Audit Quality published an Alert entitled Select Auditing Considerations for the 2014 Audit Cycle to identify and discuss seven audit areas that it believes will be most relevant to the 2014 audit cycle. The Alert describes these issues as “some of the more judgmental or complex audit areas, including those that have recently been the subject of attention and focus by regulators.” The seven areas are --

  1. Revenue Recognition
  2. Going Concern
  3. Internal Control Over Financial Reporting
  4. Auditing Accounting Estimates, Including Fair Value Measurements
  5. Engagement Quality Review
  6. Professional Skepticism
  7. Related Parties and Significant Unusual Transactions

These topics are unquestionably ones that regulators have been scrutinizing and that auditors are likely to regard as carrying high likelihood of attention and criticism in PCAOB inspections. As the CAQ points out, most of the audit areas discussed in its Alert mirror topics as to which the PCAOB has issued audit practice alerts or other forms of guidance. In particular –

Comment: While the CAQ’s statement is aimed at auditors, not audit committees, the Alert provides a road map for audit committees regarding the topics that auditors are likely to view as posing the greatest risks – and the highest likelihood of PCAOB inspection attention. As such, it may help audit committees better understand the perspective from which their audit firm will approach its 2015 engagements.