A few links and comments that I think would be of interest to auditors:
rising audit fees; AU-C label to stay around; changes to A-133, new audit report or old; will mandatory re-tender increase concentration:
Journal of Accountancy – Pubic, private companies report rise in audit fees in FY 2012 – Survey of 87 public companies and 118 private companies shows these changes in audit fees, with comparable stats for two prior years:
- year public private
- FY12 +4% +3%
- FY11 +5% +7%
- FY10 +2% flat
For comparison to your practice, the average hours for the audit in the public companies in the survey was 16,737. For private companies in the survey, the average hours on the audit were 1,769.
Take it for what it’s worth.
AICPA – “AU-C” Identifier for Clarified Auditing Standards Retained Indefinitely – All the new clarified standards that went into effect for our 12-31-12 audits are referred to as “AU-C” instead of “AU” to distinguish from the previous standards. The concept had been that the “AU-C” label would go away at the end of 2013. The AICPA announced on 8-1-13 that the “AU-C” label will be retained indefinitely. This is to reduce confusion. Sounds like a good idea to me.
I don’t know how long that link will work – probably not very.
Nonprofit Times – Federal Money: 12 takeaways on revisions to OMB Circular A-133– Lots of big changes in the works. Most of them will reduce the cost of performing a single audit. For example:
- Increase threshold from 500k to 750k
- Type A/B determination increase from 300k to 500k
- Percentage of coverage drop from 50%/25% to 40%/20% for hi/lo risk
- Combine 6 OMB circulars into 1
Grumpy Old Accountants – A New Audit Report? No…Auditor Accountability! – Professor Catanach is not impressed with the suggested very long, expanded audit report outlined by Michael Rapoport. Amongst other concerns is the suggested report would further limit an auditor’s liability in event of an audit failure. He suggests a much simpler report – the 2 paragraph version in SAS #2 from back in 1974. He then closes with a far more radical suggestion of a federal takeover of management of firms in order to identify problem offices or regions and then allow forced divestiture of those problem units.
Re:Balance – Auditor Re-Tender Every Five Years? Concentration in the UK Gets a Fresh Squeeze – Jim Peterson thinks a mandatory re-tender every fifth year in England will increase concentration amongst the Big 4 firms. He thinks second tier firms will drop out of tendering because of the high cost to present a tender that could change an audit committee’s mind and the high learning cost in the first two years. Oh, and that’s on top of his opinion that mandatory rotation (or re-tender) won’t generate any improvement in audit quality. Not that it matters, but I agree on the no-impact-on-quality comment.