Clarified Auditing Standards Learning and Implementation Plan

October 2013
COSO Updated Internal Control – Integrated Framework —Learning and Implementation Plan /

Now is the time for auditors to prepare their clients for the transition to the updated Internal Control – Integrated Framework, which was issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in May 2013 (referred to herein as the 2013 Framework). The transition period for the 2013 Framework extends through December 15, 2014, at which time the existing framework will be considered superseded. This makes the 2013 Framework effective for calendar year 2014 audits but there may be changes in internal controls in 2013. Use this roadmap to (1) understand the changes and their impact, (2) help train your professional staff to ensure effective and efficient implementation of the 2013 Framework, and (3) communicate with your clients proactively about the changes they can expect and the services you can provide. You will note several tools and resources to support you in your journey, specifically the COSO Implementation Toolkit, which provides hands-on implementation tools.

Step / Action / Description/Considerations / Recommended Timing / Tools and Resources / Owner /
1 / Assign owner or task force to become an expert (and take the lead) on understanding and implementing the 2013 Framework. / The 2013 Framework will impact engagements at all phases, but particular in planning, understanding the entity and its environment, and risk assessment. As clients transition to the 2013 Framework, it will be important to understand changes they make to the design of their internal control structure, which may occur during calendar year 2013 as they prepare for adoption of the 2013 Framework at the beginning of their fiscal year 2014. / Summer 2013 / [A&A Partner, or A&A Manager or Technical Reviewer]
2 / Familiarize yourself with the 2013 Framework. / Start with some of the overview documents on the update process and changes to the 2013 Framework provided by the COSO organization.
PCPS members can access the resources in the PCPS COSO Implementation Toolkit, including the Learning Guide, written in plain English, to help you understand
· what has changed in the 2013 Framework ;
· what hasn’t changed;
· how the 2013 framework may impact your audit and attest engagements; and
· services you may want to provide to existing or new clients to help strengthen controls in their organizations / Summer 2013 / COSO Resources (www.coso.org)
· Internal Control – Integrated Framework, Executive Summary
· COSO Internal Control – Integrated Framework, Frequently Asked Questions
AICPA Resources
· Journal of Accountancy Podcast
PCPS COSO Toolkit (AICPA’s PCPS Section members only)
· Guide to the Changes and Impacts
CPE
· Accounting and Auditing Workshop: Latest Developments (Self-Study)
· Update for Accountants and Auditors: Latest Developments (Self-Study) / [Assigned owner or task force]
3 / Take a deeper look into the substantive changes from the existing Framework and evaluate the impact on your clients. / The 2013 Framework introduces 17 principles that represent fundamental concepts associated with each of the five internal control components. It also introduces 81 points of focus that can be used to demonstrate implementation of the 17 principles. You will need to understand the structure of the 2013 Framework, including these new principles and points of focus.
For PCPS Members: The Learning Guide introduces the principles and points of focus.
The 2013 Framework provides extensive guidance on how to apply the points of focus and principles in designing effective internal control. You can also purchase the Framework in three different bundles.
Additionally, the publication Internal Control for Today’s Smart Business
· helps you apply the framework concepts by providing real-life examples;
· helps you understand how the guidance in the framework aligns with generally accepted auditing standards; and
· provides real-life examples illustrating how businesses of any size can have an effective system of internal control. / Summer 2013 / COSO Resources (www.coso.org)
· Internal Control – Integrated Framework, Executive Summary
· COSO Internal Control – Integrated Framework, Frequently Asked Questions
AICPA Resources
· Journal of Accountancy Podcast
PCPS COSO Toolkit (AICPA’s PCPS Section members only)
· Guide to the Changes and Impacts
Publications
· Internal Control for Today’s Smart Business
· Internal Control – Integrated Framework: Executive Summary, Framework and Appendices, and Illustrative Tools for Assessing Effectiveness of a System of Internal Control
· Internal Control – Integrated Framework, Internal Control Over Financial reporting: A Compendium of Approaches and Examples
· Internal Control - Integrated Framework and Compendium Bundle
CPE
· Accounting and Auditing Workshop: Latest Developments (Self-Study)
· Update for Accountants and Auditors: Latest Developments (Self-Study) / [Assigned owner or task force]
4 / Apply what you have learned about changes in the 2013 Framework to your firm’s audit and attest methodology and guidance.
Consider potential impacts to the audits and attest engagements your firm performs, factoring in considerations for smaller entities. / Revise your firm guidance and methodology to reflect the 2013 Framework. Determine your firm’s process for documentating and evaluating the 17 principles and 81 points of focus, then update your standard procedures.
Even if your firm uses a third-party provided methodology, ensure you understand the revised Framework and how the methodology provider has implemented them into their solution.
Appendix C of the Framework, Specific Considerations for Smaller Entities, may be helpful in determining efficient, effective audit procedures for smaller clients.
Ensure a quality review of the revisions to your firm guidance and audit methodology occurs. / Summer and Fall 2013 / PCPS COSO Toolkit (AICPA’s PCPS Section members only)
· Guide to the Changes and Impacts
Publications
· Internal Control for Today’s Smart Business
· Internal Control – Integrated Framework: Executive Summary, Framework and Appendices, and Illustrative Tools for Assessing Effectiveness of a System of Internal Control
· Internal Control – Integrated Framework, Internal Control Over Financial reporting: A Compendium of Approaches and Examples
· Internal Control - Integrated Framework and Compendium Bundle
CPE
· Accounting and Auditing Workshop: Latest Developments (Self-Study)
· Update for Accountants and Auditors: Latest Developments (Self-Study) / [Assigned owner or task force]
5 / Facilitate training for your professional staff and partners. / Begin early to get your audit and attest staff ready for the transition to the 2013 Framework. Inform educate and train all audit and attest staff.
Provide your staff with a general update to ensure they are aware that the COSO framework has been updated and have a baseline understanding of changes. PCPS Member Firms: Provide the Learning Guide as a general introduction to the changes in the new Framework.
Follow-up the general awareness initiative with training on the 2013 Framework. PCPS Member Firms can facilitate a training session using the Staff Training PowerPoint template. Tailor the PowerPoint to fit your firm’s needs considering your client base and audit/attest methodology. / Summer 2013 through Fall 2013 / COSO Resources (www.coso.org)
· Internal Control – Integrated Framework, Executive Summary
· COSO Internal Control – Integrated Framework, Frequently Asked Questions
AICPA Resources
· Journal of Accountancy Podcast
PCPS COSO Toolkit (AICPA’s PCPS Section members only)
· Guide to the Changes and Impacts
· Staff Training PowerPoint
Publications
· Internal Control for Today’s Smart Business
· Internal Control – Integrated Framework: Executive Summary, Framework and Appendices, and Illustrative Tools for Assessing Effectiveness of a System of Internal Control
· Internal Control – Integrated Framework, Internal Control Over Financial reporting: A Compendium of Approaches and Examples
· Internal Control - Integrated Framework and Compendium Bundle
CPE
· Accounting and Auditing Workshop: Latest Developments (Self-Study)
· Update for Accountants and Auditors: Latest Developments (Self-Study) / [Assigned owner or task force]
6 / Inform your clients of the issuance of the 2013 Framework and impacts it may have for them. / PCPS member firms, utilize the Client Communication Template to communicate with your clients about the 2013 Framework. Consider follow-up meetings or trainings with the clients to facilitate their understanding of the 2013 Framework, utilizing the client-facing PowerPointTemplate. / Fall 2013 / PCPS COSO Toolkit (AICPA’s PCPS Section members only)
· Guide to the Changes and Impacts
· Client Communication Template
For your attest clients
For your non-attest clients
Newsletter/website article
7 / Determine how the 2013 Framework may impact each audit and attest engagement, considering the client’s decision on when transition to the 2013 Framework will occur.
When determing the impact on each engagement, review the special considerations for smaller, less complex organizations or governmental entities included in the 2013 Framework. / Communicate with each client to determine when they plan to transition to the 2013 Framework and what impacts this will have on your audit and attest engagements.
Although early implementation is permitted, clients may find it impracticable to implement the 2013 Framework in the middle of a fiscal year. However; even if implementation will occur for fiscal year 2014, clients will need to evalute if any changes are necessary to their internal control structure to comply with the 2013 Framework. Changes identified will need to be implemented with sufficient time to be effective during the implementation year. This could result in changes during the fiscal 2013 year or early after year-end, which could impact the 2013 year engagement.
To make the transition to the 2013 Framework go smoothly, you may want to identify the changes specific to your clients on a case by case basis (step 6). Then consider scheduling meetings with each client to address their specific engagement and discuss scope changes and fees.
Review Appendix C of the Internal Control-Integated Framework, for scalability for size and complexity considerations for your client base. / Fall 2013 – Summer 2014 / PCPS COSO Toolkit (AICPA’s PCPS Section members only)
· Client Communication Template
For your attest clients
For your non-attest clients
Newsletter/website article
Publications
· Internal Control for Today’s Smart Business
· Internal Control – Integrated Framework: Executive Summary, Framework and Appendices, and Illustrative Tools for Assessing Effectiveness of a System of Internal Control
· Internal Control – Integrated Framework, Internal Control Over Financial reporting: A Compendium of Approaches and Examples
· Internal Control - Integrated Framework and Compendium Bundle / [Assigned owner or task force]
8 / Explore service opportunities with your non-attest clients. / The issuance of the 2013 COSO Framework provides a great opportunity to visit the topic of internal controls with your non-attest clients.
Is everyone in your practice prepared to discuss the importance of strong internal controls and the way you can help? PCPS Members can use the Learning Guide and the Client Talking Point Template to identify service opportunities. / Summer 2013-Fall 2014 / PCPS COSO Toolkit (AICPA’s PCPS Section members only)
· Guide to the Changes and Impacts
· Client Communication Template
For your attest clients
For your non-attest clients
Newsletter/website article / [Assigned owner or task force ]

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