The Public Company Accounting Oversight Board (PCAOB) today voted to propose a new auditing standard for the audits of registrants' internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, which, if adopted by the PCAOB and approved by the Commission, would supersede the PCAOB's Auditing Standard No. 2.
Christopher Cox, Chairman, U.S. Securities and Exchange Commission, said,
"The PCAOB's proposal to repeal the unduly expensive and inefficient auditing standard under Section 404 of Sarbanes-Oxley — and to replace that standard with one that strengthens investor protection by refocusing resources on what truly matters to the integrity of financial statements — is an exceptionally positive step for both investors and for America's capital markets. The SEC and the PCAOB have worked together to ensure that the Commission's proposed interpretative guidance for management and the PCAOB's proposed new auditing standard are mutually reinforcing. Together, these proposals should significantly improve the implementation of Section 404, making it more efficient and effective. Smaller public companies should particularly benefit from the scalability built into these proposals. We look forward to considering the public comments on these proposals."
Conrad Hewitt, Chief Accountant, U.S. Securities and Exchange Commission, added,
"The PCAOB's proposed auditing standard is a welcome development, and we look forward to reviewing it carefully. We encourage companies, audit firms, investors and any other interested parties to comment on both the PCAOB's proposed auditing standard and the Commission's proposed interpretative guidance for management during the proposals' overlapping comment periods. We will consider all of these comments carefully before making any recommendations to the Commission."
