PCAOB Adopts Amendments to Interim Auditing Standards

The Public Company Accounting Oversight Board (PCAOB) this week adopted amendments to its interim standards that conform the text of the interim standards to the requirements of PCAOB Auditing Standard No. 2, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements."

The Board adopted interim auditing, attestation, and independence standards on April 16, 2003, based on standards that had been developed by the auditing profession before the Board was established. Since then, the Board has adopted several permanent standards that, in various respects, supercede the interim standards.

The conforming amendments change and add to the interim standards certain text, including references, to assist auditors in performing integrated audits of financial statements and internal control. The conforming amendments also apply certain concepts developed in Auditing Standard No. 2 to circumstances in which an auditor is engaged solely to audit a company's financial statements.

The Board proposed the conforming amendments on March 9, 2004, and sought public comment. The Board received and has carefully considered 10 comment letters. The Board’s action today reflects certain changes to the conforming amendments based on the comments received.

The purpose of the conforming amendments is to specifically identify changes to the text of the interim standards that result from the adoption of PCAOB Auditing Standard No. 2. The identification of such changes is helpful in enabling auditors to comply with the Board's standards, as well as in eliminating potential confusion and inconsistencies in interpretation with respect to the affected portions of the interim standards.

The scope of the conforming amendments is relatively narrow and comprises amendments to the interim standards resulting only from the adoption of PCAOB Auditing Standard No. 2, including:

  • Consideration of internal control in a financial statement audit;
  • Communication of internal control related matters; and
    Analytical procedures.

The conforming amendments affect the interim auditing, attestation, and independence standards of the Board. Those conforming amendments that affect audits of only the financial statements reflect clarifications of concepts that are, for the most part, already included in the Board's interim standards.

The conforming amendments will not take effect unless approved by the Securities and Exchange Commission pursuant to Section 107(b) of the Sarbanes-Oxley Act. Those amendments that affect integrated audits would be effective at the same time as Auditing Standard No. 2 becomes effective (i.e., for integrated audits of the financial statements of accelerated filers in connection with periods ending on or after November 15, 2004). Those amendments that affect audits of only financial statements would be effective for audits of financial statement periods ending on or after July 15, 2005, which coincides with the effective date of the Securities and Exchange Commission's internal control reporting requirements for non-accelerated filers.

The Board said that it will publish its interim auditing, attestation, quality control, ethics and independence standards on the Board’s Web site under Standards.

The publication of the standards on the Board’s Web site is made possible by the consent of the American Institute of Certified Public Accountants. “We are taking this step to promote the clarity and accessibility of the professional standards applicable to audits of public companies,” said PCAOB Chairman William J. McDonough. “By permitting us to display the interim standards developed by the profession on our Web site, the AICPA has made a valuable contribution to the public interest.”

Source: PCAOB

You may like these other stories...

The Public Company Accounting Oversight Board (PCAOB) on Tuesday adopted a new auditing standard and amendments in three areas of the audit that could pose an increased risk of material misstatement in company financial...
Read more from Larry Perry here and in the Today’s World of Audits archive.In my last article, I presented an overview of one of the first steps in the preplanning phase of an audit engagement: reviewing prior year...
Read more from Larry Perry here and in the Today’s World of Audits archive.AU-C Section 800, Special Considerations—Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks (SPFs),...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.