May 31, 2006
PCAOB meeting in June: AS 2 and 404 under a bright light
Upcoming meetings on June 12th and 13th by the Standing Advisory Group (SAG) of the Public Accounting Oversight Board (PCAOB) suggest that there will be some rapid recommendations made in the coming weeks concerning:
- Refining Audit Standard 2 (Internal Control Audit) to encourage (some would like to see the word - "direct") audit firms to take a top-down approach to auditing internal controls over financial reporting. This may mean refining the language associated with using company-level control audits as a broad indicator of the quality of controls at the process-level.
- The value of the auditor's involvement in management's assessment of internal controls. The thinking is that an auditor's review of management's assessment can provide a preliminary assessment of how extensively the auditor will need to conduct its own audit of internal controls. Kind of like using a canary in a coal mine to indicate "problems". Oops, the canary just dropped dead. Come on audit team! We are out of here!
The fun just keeps rolling.
Click here for more information on the upcoming meeting on June 12th and June 13th in Washington.
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