In a nod to opponents and critics who complained about the costs of internal controls audits, the Public Company Accounting Oversight Board voted unanimously to circulate a proposal that would trim down the amount of testing necessary to evaluate internal controls over the financial reporting process.
The oversight body’s proposal is a principles-based standard designed to focus the auditor’s attention toward the higher-risk internal controls, thereby increasing the likelihood that material weaknesses would be found before a misstatement. It also drops management’s evaluation for assessing their controls, and provides direction on how to scale down the audit for smaller companies..
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