“We’re done with the audit… EXCEPT For Tax!” How many times have you heard these words from your auditors? My guess is every year and every quarter since you were in a position to care about the income tax provision.
Tag Archive for pcaob
Whitepaper- Controlling the “Out-of-Control” Tax Provision Or How to Make Your Auditors Love You & Your Tax Provision!
The PCAOB is using the type of logic that made you feel clever in 4th grade when you finally grasped that a square is a rectangle but a rectangle is not necessarily a square.
The general premise of the PCAOB is this; Restatements will most likely arise when there are material weaknesses in the internal controls environment. But the existence of a material weakness won’t necessarily lead to a restatement. In other words, you might still get things right in spite of poor internal controls.
If this logic holds true, there should be more general control issues (e.g., significant deficiencies) than material weaknesses and similarly more material weaknesses than financial restatements. In 2015 this did not hold true. Here is a troubling pattern: