Fraud risk was a top priority in 2023 for the Public Company Accounting Oversight Board (PCAOB), the independent regulatory body established by U.S. Congress to oversee audits of public companies and broker-dealers. The PCAOB is close to ratifying new
amendments this summer or fall related to noncompliance with laws and regulations (NOCLAR) that could make legal and investigative professionals, especially Certified Fraud Examiners (CFEs), a critical part of the audit team.
The proposed PCAOB changes
On June 6, 2023, the PCAOB proposed amendments to its auditing standards related to an auditor’s consideration of a company’s NOCLAR in the performance of a financial statement audit to establish and strengthen requirements for (1) identifying, through
inquiry and other procedures, laws and regulations with which noncompliance could have a material effect on the financial statements; (2) assessing and responding to the risks of material misstatement arising from noncompliance with laws and regulations;
(3) identifying whether there’s information indicating that noncompliance has occurred or may occur; and (4) evaluating and communicating when the auditor identifies or otherwise becomes aware of information indicating that noncompliance with laws
and regulations, including fraud, has or may have occurred. [See “PCAOB Release No. 2023-003.”]
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