The PCAOB has approved an auditing standard concerning audit reports in cases when a previously reported material weakness continues to exist.
The Public Company Accounting Oversight Board (PCAOB), created as a result of the adoption of the Sarbanes-Oxley Act in 2002, has approved Auditing Standard No. 4, regulating the actions of a company and auditors in cases where a previously reported material weakness continues to exist. The PCAOB has 90 days to outline the affirmative audit steps described in the standard for such cases. A statement by the Security Exchange Commission (SEC) on the issue can be viewed at the SEC's official site (PDF).
At the end of December 2005 the PCAOB released its new recommendations for conducting the checks stipulated in section 404 of the Sarbanes-Oxley Act. The new guidelines were drawn up after an analysis of Auditing Standard No. 2 and how it worked in practice. It is presumed that adherence to the new recommendations will make the auditing process more effective.
“We advise all companies represented on the U.S. stock exchanges or just planning to hold an IPO in America to familiarize themselves with every new statement made by the SEC or PCAOB. Despite the fact that there has been some discontent among corporations regarding the severity of the Sarbanes-Oxley Act and vague rumors about the liberalization of section 404, I'm convinced that for the next two to three years large and medium-sized business can expect no respite. Therefore, the utmost attention will need to be given to every new announcement made by the regulatory bodies," says Denis Zenkin, marketing director at InfoWatch.
Source: IT Compliance Institute
