The Securities and Exchange Commission approved the Public Company Accounting Oversight Board's new internal control auditing standard by a 5-0 vote in late July.Registered audit firms are now required to use the new standard for all audits of internal controls no later than for fiscal years ending on or after Nov. 15, 2007. Auditing Standard No. 5 replaces the older AS2.
The new standard implements Sections 103 and 404 of the Sarbanes-Oxley Act, but takes a less costly approach than the older standard. Companies had complained that Section 404 audits had been too rigorous and led to high fees. AS5 takes more of a risk-based approach than the older standard to make the audit work more efficiently.
