The new PCAOB standard will be submitted for SEC review by early June, in time for the 2007 financial statement audits.

The SEC staff will be working closely with the PCAOB to make the internal controls provisions of SOX Section 404 more efficient and cost effective.

SEC Chairman Christopher Cox said the result of the new auditing standards should allow the internal control review and audit to focus efforts on “what truly matters.”

According to the Ohio e-CPA Weekly, the SEC will focus now in four areas:

• Aligning the PCAOB's new auditing standard (AS-5) with the SEC's proposed new management guidance under Section 404, particularly with regard to prescriptive requirements

• Scaling the 404 audit to account for the particular facts and circumstances of companies

• Encouraging auditors to use professional judgment in the 404 process, particularly in using risk-assessment

• Following a principles-based approach to determining when and to what extent the auditor can use the work of others