PCAOB’s new Audit Standard (AS5) for Internal Control over Financial Reporting is Approved by the SEC
AS5, Audit of Internal Control over Financial Reporting (ICoFR) that is integrated with an Audit of Financial Statements, was approved today by the Securities and Exchange Commission on 25-Jul-07 and replaces the PCAOB’s previous internal control auditing standard, AS2. SEC registered audit firms are required to use the new standard for all audits of internal control for clients whose fiscal years ending on or after 15-Nov-07.
SEC expects the new auditing standard, in combination with the Commission's new management guidance will make Section 404 audits and management evaluations more risk-based and scalable to company size and complexity.
AS5 improvements include:
- is less prescriptive
- makes the audit scalable - so it can change to fit the size and complexity of any company
- directs auditors to focus on what matters most - and eliminates unnecessary procedures from the audit
- includes a principles-based approach to determining when and to what extent the auditor can use the work of others
Using the above SEC guidance, now is the time for quality managers, engineers, and auditors, to offer their expertise in revising and auditing their companies internal controls from operations into accounting / finance and IT.
