AICPA offers audit guidance on use of specialists and pricing info

The American Institute of CPAs’ Auditing Standards Board amended its standards Tuesday to include guidance on the use of specialists and pricing information.

Statement on Auditing Standards (SAS) No. 144 amends two earlier auditing standards, SAS No. 122 and SAS No. 143, to address some of the comments the board received on an exposure draft of SAS No. 143. The amendments provide guidance on applying SAS No. 143 when a company has used the work of a specialist to develop accounting estimates, when the auditor evaluates management’s estimates related to the fair value of financial instruments, and when a firm uses the work of an auditor’s specialist.

The guidance comes at a time when auditing standards are likely to come under renewed scrutiny after the abrupt removal last Friday of the chair of the Public Company Accounting Oversight Board, William Duhnke, by the new chair of the Securities and Exchange Commission, Gary Gensler, who plans to remove the rest of the PCAOB board members in the future (see story).

The AICPA’s Auditing Standards Board provides guidance on auditing and assurance for private companies. “We heard feedback that more guidance on auditing the fair value of financial instruments would be helpful,” said AICPA chief auditor Jennifer Burns in a statement. “This new standard provides that and has a particular focus on the use of pricing services. We’ve also taken the opportunity to modernize our standards on management’s and auditors’ use of specialists, which is becoming more common due to the growing complexity of today’s financial reporting.”

More details on SAS No. 144 can be found here. The guidance takes effect for audits of financial statements for periods ending on or after Dec. 15, 2023.

Meanwhile, the removal of Duhnke and plans to overhaul the rest of PCAOB board are reverberating this week. “I think it’s going to have a big impact on what the board’s priorities are and what the relationship with the SEC is like,” said Raphael Larson, who served for 12 years as a member of the PCAOB’s Division of Enforcement and Investigations and as an associate director, and who is now a partner at the law firm McDermott Will & Emery. “It’s hard to say exactly until you know who’s replacing those folks, but at the same time the signal is that it’s going to be significant changes.”

PCAOB board member Duane DesParte was named acting chair on Friday, but the SEC is searching for a more permanent replacement for Duhnke. Larson expects to see enforcement stepped up under whoever succeeds them. “From my perspective, enforcement has been much less of a priority under Duhnke, and I think that will change whoever the new chairman is,” he said. “Enforcement will start to be more important again in a way that it may not have been under Duhnke.”

Separately, the AICPA submitted recommendations Tuesday to the Internal Revenue Service asking the IRS to simplify and improve the administrative adjustment request process under the centralized partnership audit regime. The AICPA proposed a simplified framework and the creation of a new Form AAR-EZ to ease the administrative adjustment request process.