US audit panel proposes financial statement rule
Headline News
U.S. audit authorities on Tuesday proposed auditors specify whether a company's financial restatement is due to an error or a change in accounting principles.
The Public Company Accounting Oversight Board (PCAOB) said the change to their auditing standards would help investors clearly distinguish when a company restated their results to comply with a different interpretation of accounting rules, or made an actual mistake.
"The proposal would specifically focus auditors on ensuring that disclosures about those changes are accurate," board member Charles Niemeier said in a statement.
The standard, however, would not distinguish between different types of mistakes such as the misapplication of accounting rules, mathematical errors or fraud.
The audit watchdog also proposed it align its standards on how auditors evaluate the consistency with which a company applies U.S. accounting rules with a standard released by the Financial Accounting Standards Board, which writes U.S. accounting rules.
The board also asked for public comment on a "concept release" that discusses whether an accounting firm that performed tax services for a company executive should be able to act as that company's auditor later in the same year.
The board said it wanted to hear comments on whether those services would compromise the firm's independence or if prohibiting those services would jeopardize a company's ability to switch auditors.
The financial statement proposal and the "concept release" are available for public comment through May 18.
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