The Public Company Accounting Oversight Board voted to adopt Auditing Standard No. 5, which will replace its previous internal control auditing standard, the much-maligned Auditing Standard No. 2.
In announcing the new standard, “An Audit of Internal Control Over Financial Reporting That Is Integrated with an Audit of Financial Statements,” the board said that the rule was designed to increase the likelihood that weaknesses in internal controls are found before they result in material misstatements of a company’s financial statements. But more importantly to the smaller public companies that have lobbied for changes to AS2, the board said that the standard is also meant to eliminate auditors performing unnecessary work.
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