The Public Company Accounting Oversight Board (PCAOB) voted unanimously on Thursday to propose a measure to give corporations and auditors flexibility in reporting when material weaknesses in their internal financial control have been corrected. The PCAOB will vote again at the conclusion of a 45-day comment period. The Securities and Exchange Commission (SEC) must then approve the measure.
Board Chairman William McDonough told MarketWatch the proposal should give companies an opportunity to offer investors âadded assuranceâ about their accounting practices, noting that a number of companies have disclosed material weaknesses during this year's reporting season. But board member Daniel Goelzer said it would be unfortunate if the board's proposal became a permanent requirement on companies.
âIt seems to me that, in most cases, investors should be able to accept management's assurance that it has remediated a weakness without the added support of an interim auditor's opinion,â Goelzer to MarketWatch.
Section 404 of the Sarbanes-OxleyAct of 2002 Requires auditors to report on companies' internal control over financial reporting. Companies are required to report whether they have any âmaterial weaknessesâ in controls. The PCAOB was established by the Sarbanes-Oxley Act to oversee the auditors of public companies.