In these vignettes, the audit team’s substantive testing detected an error in a prepaid insurance account; the company didn’t record amortization on a prepaid insurance arrangement. In the first vignette, the partner, the manager and the senior associate are discussing the design of the control over the account, how it was operationalized, and why the control failed to detect the error.

In these vignettes, the focus is on breakdowns in review controls and steps external auditors take in order to evaluate the design and effectiveness of controls. The audit manager is evaluating the management review control over goodwill impairment estimates.

PCAOB auditing standards establish requirements regarding the auditor’s consideration of materiality in planning and performing the audit. This consideration is one of the most important judgments that an auditor makes. In this video, the expert panel discusses the challenges that auditors face in determining the quantitative and qualitative elements of risk assessment at the consolidated financial statement level and at the individual component level.

Under PCAOB auditing standards, the auditor should determine tolerable misstatement for the individual locations or business units. In this video, the expert panel describes some of the key challenges that auditors face in making those decisions.

In this video, the expert panel discusses the challenges that auditors face in adequately documenting their judgments and conclusions around the risks identified in the risk assessment process. They mention the importance of articulating the variable audit response required for low, medium, and high risks. The panel also addresses this question of how management documents its response to their identified risks.

The implementation of new accounting standards can present a unique set of challenges for preparers (and their auditors). Public companies must begin to apply the new revenue recognition standard to annual reporting periods beginning after December 15, 2017; the new leasing standard will be applicable to annual reporting periods beginning after December 15, 2018. In this video the expert panel discusses how this “new GAAP” could impact the auditor’s assessment of the risk for misstatement in the financial statements.

Companies are confronted with myriad of risks that can impact their business, such as an emerging competitor, loss of market share, and, obsolescence of their product line. The pace of change has also brought on disruptive innovations such as Blockchain, cryptocurrencies, and risks such as cybersecurity breaches. In this video, the panel explores the challenges that company management and boards face as they attempt to assess and manage the risks.

Company management faces considerable challenges when it comes to addressing the wide range of business risks. In this video, we learn how some companies address risks that have been identified, including how they communicate that information to the board.