2/28/2008 -- PCAOB Issues Proposed Standard on Engagement Quality Review.
The Public Company Accounting Oversight Board unanimously approved issuing for public comment Auditing Standard No. 7 (AS 7), Proposed Auditing Standard on Engagement Quality Review (PCAOB Release No. 2008-002), at an open board meeting on February 26, 2008, in Washington, D.C.

The proposed standard was published on the PCAOB's website, and the public comment period will be 75 days ending on May 12, 2008.

The proposal takes a risk-based approach to engagement quality reviews and was developed with similar existing international standards in mind.

Section 103 of the Sarbanes-Oxley Act of 2002 directs the Board to include in its auditing standards a requirement that each registered public accounting firm provide a concurring or second partner review and approval of each audit report and concurring approval in its issuance. Since April 2003, PCAOB Rule 3400T on interim quality control standards required a registered public accounting firm to comply with the AICPA's Auditing Standard Board's Statements on Quality Control Standards, QC 20-40 (AICPA 2002), and the AICPA SEC Practice Section's Requirement for Membership Section 1000.08(f).

The proposal, if adopted, builds on the interim standard and includes four main changes:

• A more explicit standard for risk assessment;
• A requirement for the reviewer to approve the issuance of the audit report;
• A requirement for the issuer of the audit report to not proceed if they know or should know that the report is inappropriate; and
• More detailed documentation for the concurrent review.

2/19/08 -- PCAOB Standing Advisory Group to Discuss the Use of Professional Judgment.
The Public Company Accounting Oversight Board's Standing Advisory Group released an agenda to its first open meeting of 2008, scheduled for Wednesday, February 27, in Washington, D.C.

The meeting will include a panel discussion on the use of professional judgment, based on the proposed framework for judgments developed by the Securities and Exchange Commission's (SEC) Advisory Committee on Improvements to Financial Reporting (CIFR), which were included in the panel's interim progress report.

The SAG will also hold discussions on (a) the supervision of audit work performed by registered public accounting firms, and (b) quality control practices of global audit networks in audits of financial statements, including financial statements prepared in accordance with International Financial Reporting Standards (IFRS).

1/31/08 -- PCAOB Approves Auditing Standard No. 6 on Financial Statement Consistency.
The Public Company Accounting Oversight Board approved an auditing standard designed to bring the Board's rulemaking in line with that of the Financial Accounting Standards Board, at an open meeting in Washington, D.C. on January 29, 2008.

Auditing Standard No. 6 (AS 6), Evaluating Consistency of Financial Statements, updates the PCAOB's interim standards to align them with FASB Statement of Financial Accounting Standards (SFAS) No. 154, Accounting Changes and Error Corrections, and the proposed SFAS, The Hierarchy of Generally Accepted Accounting Principles (Exposure Draft No. 1300-001), which is related to the Codification Project.

The standard also removes the GAAP hierarchy from the PCAOB's interim auditing standards, based upon the Board's view that it is no longer necessary to have the hierarchy there because of the FASB's decision to address the hierarchy in its proposed standard.

While AS 6 will not fundamentally alter the interim standard's requirement that an auditor must explain a change in accounting principle or the correction of misstatements, it does add a level of transparency.

AS 6 will be forwarded to the SEC for its approval, as mandated by the Sarbanes-Oxley Act of 2002.

The PCAOB's changes would supersede the American Institute of Certified Public Accountants' (AICPA) AU Section 420, "Consistency of Application of Generally Accepted Accounting Principles."

12/12/07 -- PCAOB Issues Staff Audit Practice Alert on Fair Value.
The Public Company Accounting Oversight Board issued on December 10, 2007, Staff Audit Practice Alert No. 2, Matters Related to Auditing Fair Value Measurements of Financial Instruments and the Use of Specialists, to provide auditors with information related to auditing fair value measurements and disclosures and the use of specialists in this area.

The alert addresses:

• Auditing fair value measurements,
• Classification of fair value measurements within the fair value hierarchy established by the Financial Accounting Standards Board's (FASB) Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements,
• The use of specialists in fair value measurements, and
• The use of pricing services in fair value measurements.