Public company auditing – Putting revenue in the spotlight

Description

Abstract: In September 2014, the PCAOB issued a Staff Audit Practice Alert because of concern about the frequency with which its inspectors were observing significant audit deficiencies in which auditors didn’t perform sufficient auditing procedures related to revenue. This article discusses the Alert, particularly as it pertains to gross vs. net revenue, testing revenue from contractual arrangements, and recognizing revenue in the correct period. A sidebar lists some common revenue-related audit deficiencies.