 |
Sarbanes-Oxley News & Developments
PCAOB Airs Proposal for Sarbox Section 404New standard would provide guidelines for audits of internal control over financial reporting.
> > The PCAOB is finally rolling up its sleeves and getting down to business. The board proposed its standard on an audit of internal control over financial reporting, and put it out for public comment. The PCAOB is also seeking comments on a rule that clarifies auditing terminology.
The SEC issued its version of the rules, which implement Section 404 of the Sarbanes-Oxley Act. Section 404 requires management of a public company to assess the effectiveness of internal control over financial reporting of a company, as of the end of the most recent fiscal year of a company, and attest in its annual report whether the internal control is effective for the company.
The PCAOB proposed standard requirements that the auditor communicate in writing to the audit committee of a company all significant deficiencies and material weaknesses of which the auditor is aware. The auditor also is required to communicate in writing to the management of a company all internal control deficiencies, and to notify the audit committee that such communication has been made.
The proposed auditing standard identifies a number of circumstances that are defined as significant deficiencies and would be strong indicators of a material weakness. They include: ineffective oversight, material misstatement in financial statements and significant deficiencies that have been communicated to management.
Source: CFO
Published:2003-10-09
|
|
