PCAOB SEES ROOM FOR IMPROVEMENT IN AS5 AUDITS

Washington, D.C. - Many accounting firms are doing a good job of following new standards for conducting risk-based audits of internal controls, but others are not applying the standards properly, according to a new report by the Public Company Accounting Oversight Board.

The PCAOB examined portions of approximately 250 audits of internal controls by the eight largest domestic registered firms in 2007 and 2008. The report assesses the first year of implementation of the risk-based Auditing Standard No. 5, which was effective for audits for fiscal years ending on or after Nov. 15, 2007.

In each of the areas that inspectors reviewed, they observed instances of inappropriate application of the standard. In general, the areas where inappropriate application was most frequently observed were risk assessment, the evaluation of entity-level controls, and the nature, timing and extent of the controls testing.

The PCAOB noted that it is not changing or proposing to change any existing standard in the report, nor is the board providing any new interpretation of any existing standards in the document.

ACCOUNTANTS DIVIDED OVER REGULATORY OVERHAUL

Melville, N.Y. - Accountants have mixed feelings about the Obama administration's proposed financial regulatory overhaul, according to a new survey of 350 finance professionals by the Institute of Management Accountants and recruitment firm Ajilon Finance.

The survey found that 48 percent of respondents believe that the plan will have a very or somewhat positive impact. However, 40 percent say it will have a barely positive or negative effect.

Those who believe it will have a negative effect believe that it will be too difficult to implement and enforce (29 percent), the country will find itself in a similar mess in a few years (11 percent), or that the plan is "too little, too late" (5 percent) or doesn't go far enough to reduce excessive risk-taking and improve consumer and investor protections (3 percent).

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access