PCAOB Update on Cybersecurity Threats: Where Are We?
According to a speech the Public Company Accounting Oversight Board (PCAOB) gave last month at the Baruch College 18th Annual Financial Reporting Conference, cybersecurity is an emerging area for oversight for public companies and their auditors.
PCAOB Board Member Kathleen Hamm discussed cybersecurity being one of the most significant economic, operational and national security threats currently, as well as a key risk to investors and capital markets. She noted that the public sector, private institutions and individuals each share responsibility for protecting individual and collective assets and each other from cyber threats. She also noted that emerging technologies and data analytics will fundamentally change the way financial information is reported, how audits are conducted and ultimately how the PCAOB performs its work.
The key topic covered was the role of auditors as it relates to cybersecurity threats facing the financial reporting system, including their:
- Limited but important role in focusing on information technology that public companies use to prepare financial statements
- Responsibility to include cybersecurity as a part of audit risk assessments
- Responsibility to assess the nature and extent of data breaches, consider the expected effect of the breach on a company’s operations, assess whether the incident resulted from a deficiency in internal controls, and respond to the incident in a timely fashion
The full text of this speech can be found here.
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