Accounting & Auditing Update

For the first time since 2010, adverse auditor opinions on internal control over financial reporting tapered off in 2017.

COSO has published an addendum to its ERM framework to illustrate examples of how to apply the framework to real situations.

As new leadership takes the helm at COSO, the board is considering whether it can help sort out ongoing tension over public company internal control reporting.

Grant Thornton's latest PCAOB inspection report, dating to 2016, shows improvement over prior year results.

After several years of steadily improving results, Crowe Horwath saw an increase in adverse findings in its latest PCAOB inspection report.

Academics say they have identified a link between internal control weaknesses and later revelations of fraud, lending fresh support to key provisions of SOX.

COSO, author of the most widely accepted internal control framework in the United States has released a new guide meant to help companies beef up their fraud risk management. More from Tammy Whitehouse.

Accounting-related class-action settlements jumped to $2.6 billion in 2015, with 86 percent of the cases involving allegations of internal control weaknesses, according to the latest analysis by Cornerstone Research. The largest increase in settled cases in 2015 involved cases where investors raised allegations of internal control weaknesses but the company did not announce any such weaknesses. In terms of filings, the number of accounting-related cases containing internal control allegations has increased steadily since 2012, notes Cornerstone.

Audit regulators globally say they aren’t satisfied with inspection results the past few years and are working with the six largest global audit networks—Deloitte, EY, KPMG, PwC, BDO, and Grant Thornton—to step up the pace of improvement. The International Forum of Independent Audit Regulators, a global association of audit regulators that includes the Public Company Accounting Oversight Board, has reached an agreement with the networks on a new initiative to achieve “a measurable reduction” in inspection findings by 2019.

According to a recent KPMG poll, continued pressure on internal control over financial reporting is the most pressing concern for financial reporting executives. Nearly one-third of 400 respondents, or 31 percent, said internal controls are at the top of their worry list beyond their basic financial reporting responsibilities. One-fourth, or 26 percent, put data infiltration and IT security ahead of internal controls and other concerns, an area that bottomed out in the same survey only a year prior, KPMG says.

The number of SEC comment letters regarding 10-Ks and 10-Qs issued during the first six months of 2014 decreased about 25 percent compared to the same period in 2013, according to Audit Analytics. In our latest guest post from the firm, Audit Analytics look at the most comment types of issues: results of operations, internal control, fair value, and more. 

Earlier this year, Citigroup received a comment letter from the SEC asking about the effectiveness of its internal control over financial reporting, given the discovery of fraud in its Banamex division in Mexico. In this guest post, Audit Analytics examines the issues raised by the SEC, how Citi responded, and whether its final answer that, yes, ICFR remained effective, is in step with most ICFR assessments and disclosures.