The Public Company Accounting Oversight Board has proposed a new auditing standard covering confirmation procedures, with more of a focus on obtaining audit evidence from independent third parties.
The proposed standard would strengthen the requirements under the current auditing standard, AU sec. 330, The Confirmation Process, which it would replace.
"The proposal would modernize the confirmation standard and strengthen its requirements to better protect investors, said PCAOB acting chairman Daniel L. Goelzer in a statement. The proposed new standard would also more explicitly incorporate consideration of the risk of material misstatement due to error or fraud into the selection, design, and performance of confirmation procedures.
On April 14, 2009, the PCAOB issued a concept release on possible revisions to the confirmation standard, which was written in the early 1990s. The PCAOB received 24 comment letters on the concept release. In addition, revising the existing confirmation standard has been discussed with the PCAOB Standing Advisory Group.
The proposed standard recognizes the importance of audit evidence obtained from independent third parties and, in doing so, strengthens and extends the requirements for using confirmations in the audit process, said PCAOB chief auditor and director of professional standards Martin F. Baumann.
Comments are due Sept. 13, 2010. Any new auditing standard that is adopted by the PCAOB will be submitted to the Securities and Exchange Commission for approval.
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