The Public Company Accounting Oversight Board (PCAOB) staff recently issued an overview of its planned 2021 inspection focus areas and other related matters, together with an accompanying audit committee resource.
The overview notes that the PCAOB’s 2021 inspection plans will directly focus on the effects of the pandemic on public companies’ financial reporting. The PCAOB staff plans to select audits for review in industries experiencing particularly significant disruptions or elevated risks during the pandemic (e.g., transportation, entertainment, hospitality, manufacturing, commercial real estate and certain aspects of the retail segment). When selecting audit areas for review, PCAOB staff will increasingly select certain non-traditional financial statement areas for review, and will continue to target areas of higher risk, such as impairments, going concern assessments, allowance for loan losses and fraud.
The PCAOB’s audit committee resource suggests questions audit committees could use to engage with their auditors regarding additional matters that will be emphasized in the 2021 PCAOB inspections, including:
- The auditor’s risk assessments
- The firm’s quality control systems
- How a firm complies with auditor independence requirements
- Fraud procedures
- Critical audit matters
- How firms implement new auditing standards
- Supervision of audits involving other auditors