The Public Company Accounting Oversight Board has voted to adopt Auditing Standard No. 6, "Evaluating Consistency of Financial Statements," and an accompanying set of amendments to its interim auditing standards.

The new standard would require auditors to specify why changes were made on financial statements, and whether they were caused by mistakes or a change in accounting. The standard and related amendments update the auditor's responsibilities to evaluate and report on the consistency of a company's financial statements and align the auditor's responsibilities with the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 154, "Accounting Changes and Error Corrections." The PCAOB said it adopted the standard and amendments in light of SFAS 154 and the impending issuance of another SFAS, "The Hierarchy of Generally Accepted Accounting Principles."

AS6 improves auditor-reporting requirements by clarifying that the auditor's report should indicate whether an adjustment to previous financial statements results from a change in accounting principle or the correction of a misstatement.

"Investors should benefit from these improvements," said Mark Olson, PCAOB chairman, in a statement.

The PCAOB also removed the hierarchy of generally accepted accounting principles from its interim auditing standards. The PCAOB believes that the GAAP hierarchy is more appropriately located in the accounting standards. Because FASB intends to incorporate the hierarchy in the accounting standards, it won't be needed in the auditing standards.

Auditing Standard No. 6 and the amendments, if approved by the Securities and Exchange Commission, will become effective 60 days after SEC approval.

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