Monday, February 13, 2006
SEC OKs Internal Control Audit Standard
The Securities and Exchange Commission approved a Public Company Accounting Oversight Board standard last week telling auditors how to report on whether a client's previously reported material weakness in internal controls over financial reporting still exists. Since companies already have to report - and auditors opine - on the status of controls gaps in their 10Qs and 10Ks, such reports would be made within a quarter.
Auditing Standard No. 4, which the PCAOB adopted on July 26, 2005, establishes a stand-alone, voluntary engagement in which an auditor would express an opinion on whether the reported material weakness in internal controls over financial reporting under Section 404 of the Sarbanes-Oxley Act still exists.
The PCAOB believes that companies will weigh the benefits of the boost in investor confidence in their financial reporting they could gain by an auditor signoff against the costs of such an engagement, according to the board's release on its proposed standard last summer.
posted by Brian Moran @ 8:52 AM