The Securities and Exchange Commission endorsed the recommendations of the agency's professional staff to eliminate "waste and duplication" in companies' compliance with Sarbanes-Oxley. The change is particularly aimed at providing relief for smaller companies.
The SEC told its staff to focus their work in four areas:
* Aligning the Public Company Accounting Oversight Board's new auditing standard (AS-5) with the SEC's proposed new management guidance under Section 404;
* Scaling the Section 404 audit to account for the particular facts and circumstances of different companies, particularly smaller companies;
* Encouraging auditors to use professional judgment in the 404 process, particularly in using risk-assessment; and,
* Following a principles-based approach to determining when and to what extent the auditor can use the work of others.
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