Auditors have been put on notice about options backdating.

The Public Company Accounting Oversight Board has issued its first ever "audit practice alert" on options backdating.

"Auditors planning or performing an audit should be alert to the risk that the issuer may not have properly accounted for stock option grants and, as a result, may have materially misstated its financial statements or may have deficiencies in its ICFR" (That's accountant-speak for Internal Controls Over Financial Reporting).

It tells auditors to be mindful of various factors, including tax effects and their impact on cash flows, and "possible illegal acts".

On July 7, The Wall Street Journal carried a report which said the Securities and Exchange Commission had asked the PCAOB to hold fire and shelve its report until the SEC had issued its document. You can read the full report here.

Which is interesting given the way the SEC's executive pay rules released last week seemed to dance around the issue of backdating.

For the record, both the SEC and PCAOB have told CFO.com that they just wanted to be sure their respective documents weren't in conflict. The guys just wanted to get their lines right.