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The PCAOB adopted Auditing Standard No. 5, the new audit standard for internal control over financial reporting. The principles-based auditing standard will eliminate unnecessary procedures. “The renewed confidence in financial reporting is critical for the health of our markets', said Mark Olson, PCAOB Chairman. “The new standard is more risk-based and scalable, which will better meet the needs of investors, public companies and auditors alike”
'These key reforms should ensure that Section 404 is implemented in a risk-based and appropriately-scalable fashion, without sacrificing investor protection or diminishing the value of sound internal controls over financial reporting”, U.S. Treasury Under Secretary Robert Steel stated
The new standard is designed to increase the likelihood that material weaknesses in internal control will be found before they result in material misstatement of a company's financial statements. The final standard also focuses the auditor on the procedures necessary to perform a high quality audit that is tailored to the company’s facts and circumstances.
The Board also adopted the related Rule 3525, Audit Committee Pre-Approval of Non-Audit Services Related to Internal Control Over Financial Reporting, and conforming amendments to certain of the Board's other auditing standards.
Press release
Standard and further comment
Statement Robert Steel