Get in control with a tax control checkup

In July 2023, the Public Company Accounting Oversight Board (PCAOB) shared in their Staff Update and Preview of 2022 Inspection Observations that both audit deficiencies and noncompliance with PCAOB standards and rules rose in 2022. And while the PCAOB aims to evaluate the work of audit firms, the unfortunate impact to audit clients is increased scrutiny and documentation, creating longer audits and more investment of your time.

Common audit deficiencies related to testing Internal Controls over Financial Reporting (ICFR) were similar to those reported in prior years and include:

• Not sufficiently evaluating whether or not controls with a review element operated at a level of precision to prevent or detect material misstatements
• Testing the accuracy and completeness of information produced by the company and used by the auditor for user access and change management
• Testing the accuracy and completeness of data used by the control owner

Increased PCAOB audit deficiencies may potentially create new issues for you and your team.  You won’t be able to rely on past audit history as a more stringent quality review may bring up additional questions or request additional support not previously required.

Whether your company is an accelerated filer or not, there will be a continued impact to you and your organization. Given the complexity of tax processes in general, the tax department is rarely seen as anything but a red flag in a company level risk assessment. Add to this the burden of internal pressure from the top to improve accuracy, transparency and efficiency, it may feel as though the list of requirements just doesn’t stop growing.

How can Baker Tilly help you prepare for year-end?

Baker Tilly is here to serve as your advocate and advise you on dealing with these new challenges and alleviate the burden you experience at year-end. Have you considered a review of your tax processes and controls to prepare yourself for the year-end provision? A review will help you:

• Understand your existing processes, controls, and challenges
• Review existing tax work papers and control documentation
• Identify gaps in your processes and pinpoint areas of potential audit risk
• Propose suggestions to streamline your existing processes and accelerate timeline prior to year-end