NCACPA’s Technical Committees Discuss Audit Quality

By: April Adams, CPA; Melisa Galasso, CPA, CGMA; and Deetra Watson, CPA, CGMA

On December 16, 2015, the Accounting & Attestation (A&A), Not-for-Profit (NFP), Employee Benefit Plans (EBP), and Governmental Accounting & Auditing (GAA) committees of NCACPA held a joint session. The focus of the conversation was the AICPA’s Six-Point Plan to improve audit quality, which has been a major item of discussion this year for the profession. The purpose was to have all of the technical committees come together to see how NCACPA could best help its membership address this issue. The day was packed with lots of speaker presentations and open discussion.

The objective of the joint meeting was to cover the Six-Point Plan and then discuss NCACPA’s response. The meeting kicked off with an overview of the Six-Point Plan by Carl Mayes from the AICPA. He briefly discussed each of the six points. He also addressed how the AICPA incorporated NCACPA’s feedback from an exposure draft comment letter the association responded to earlier in the year. Speakers then walked through each point individually. For the “Standards and Ethics Point,” Melisa Galasso gave an overview of the Code of Conduct changes and NCACPA’s response including blogs, articles, and webinars. Next, the chairs of each committee provided a review of standards issued during the year. The A&A Committee covered the 17 Accounting Standards Updates (ASUs) issued by the Financial Accounting Standards Board (FASB) as well as the Statement on Auditing Standards (SAS) issued by the AICPA. The GAA Committee covered the findings that the Local Government Commission came across following the implementation of GASB 68, and then provided an update on the GASB statements issued this year. The NFP Committee covered FASB’s NFP Financial Statement exposure draft and the committee’s consequent response and involvement in due process.

The “CPA Learning & Support Point” was multifaceted. First, each chair provided an overview of their conferences and topics planned in 2016 to educate NCACPA members. Then, Carey Mitchell, Ashley Britton, and Teresa Bordeaux, representing the AICPA, spoke to the group about the AICPA Competencies Model that is being developed for the fields of A&A, NFP, and GAA. They also discussed the new certificate programs being rolled out by the AICPA. Finally, they discussed the Governmental Audit Quality Center and its role in CPA learning and support.

After breaking for lunch and a Secret Santa exchange, Frances McClintock from the AICPA discussed the proposed Future of Practice Monitoring. She fielded several questions from the group on the AICPA’s response. Henry White, chair of the NCACPA Peer Review Committee, then discussed NCACPA’s peer review process and some of the major issues they came across during the year as part of the “Peer Review” point of the discussion. The session closed with the “Enforcement” point, and  David Nance from the Board of Examiners discussed some of the major issues regarding enforcement of audit quality across the state.

Once the presentations were finished, Jackie Asekhauno, Learning Manager at NCACPA, moderated a discussion of the Six-Point Plan and NCACPA’s response.

The A&A Committee plans to include some of the major issues identified by the Board of Examiners in the development of its agenda for its upcoming conference in June, which will include a topic session on audit quality.

The NFP Committee has similar plans for its 2016 conference. Each year, the NFP conference includes a track for those in public industry. In the 2015 NFP conference, there were several sessions relating to audit quality and how to resolve audit reporting deficiencies. The NFP Committee is underway planning for the 2016 conference and will incorporate a session addressing changes in the Single Audit (Uniform Guidance) to make sure those in public industry understand the changes and are equipped to provide quality audits in accordance with the new guidance. For the first time, the 2016 conference will also include a Q&A session specific to those in public industry to allow auditors to field questions to panelists who have expertise in audit quality.

Audit quality has also been a major topic discussed over the past several years at each GAA Committee meeting. North Carolina is unique because it has a Local Government Commission (LGC) that reviews all local government audit reports annually.  This annual review provides some insight into the state of audit quality and financial reporting, and  the LGC communicates any concerns directly to the State Board. The LGC also serves as a great resource for audit quality by providing support to both the unit and its auditor.  The GASB has issued several new standards recently that have a higher level of difficulty involved in the implementation stage, and the GAA Committee is dedicated to helping identify the issues and providing solutions for how to implement these new standards. The 2016 GAA conference will cover the new Uniform Guidance related to single audit as well as the new GASB Standards.

You can direct any questions on the joint committees meeting to Jackie Asekhauno at jasekhauno@ncacpa.org.